Sky Blog
Managers have strong incentives to present a favorable image of their companies to investors, analysts, and the public, raising concerns about the credibility of voluntary disclosures. These concerns are particularly severe for unaudited forward-looking disclosures because they are often qualitative …
The ongoing controversy surrounding the artificial intelligence company OpenAI, Inc. (OpenAI) offers valuable, broad-based governance lessons for corporate boards across industry sectors and regardless of whether they are for-profit or non-profit companies. The lessons include those relating to mission restrictions, …
In today’s rapidly evolving corporate landscape, the composition of boards is not just a matter of compliance or social responsibility; it’s a strategic imperative that shapes the future of firms. Amidst growing public scrutiny and socio-economic shifts, particularly following the …
Four score and twelve years ago, Adolf Berle and Merrick Dodd debated the fundamental role of corporations within society. We have engaged in that debate ever since. In a nation conceived in liberty and dedicated to the proposition that all …
A ground-breaking study provides new data about diversity on the boards of directors of 3,031 companies (representing 2,503 U.S. and 528 foreign firms) listed on the NASDAQ stock exchange.
The demographic information in the study is based on voluntary self-identification …
In a significant corporate governance development, the National Association of Corporate Directors (“NACD”) has released a new report addressing the important role that culture plays in promoting effective governance discourse.
NACD describes the report as a “call to action” for …
Corporate governance can play an important role in a company’s approach to machine learning technologies such as artificial intelligence (“AI”) and in the mitigation of risks associated with their use.
A thoughtfully developed governance structure for AI will reflect oversight, …
Financial crises are often followed by debates about whether bankers’ incentives helped create distress in the financial sector. We contribute to this debate by documenting the extent to which bankers’ pay contains prudence-related targets, the association between those targets and …
In a potentially precedent-setting case, 11 directors of global energy company Shell Plc (formerly Royal Dutch Shell Plc) [1] are being sued in their personal capacity over the company’s energy transition strategy. The claim, which has been filed in the …
The 2023 proxy season is underway for public companies and their investors. Corporate secretaries, lawyers, and executives are actively engaged in the SEC’s shareholder proposal process. Consistent with recent proxy seasons, a significant number of companies are receiving proposals calling …
Increasing corporate focus on environmental, sustainability, and governance (“ESG”) has prompted considerable criticism from across the ideological spectrum. Those who disagree with that focus – viewing it as a breach of fiduciary duty and antithetical to profit maximization – have …
The role of the audit committee in a company’s board of directors has changed significantly since the passage of the Sarbanes-Oxley Act of 2002 (SOX). Traditionally, audit committees have overseen the company’s independent auditor, the internal audit function, and other …
A fundamental question in corporate governance research is whether the board of directors affects firm value. Some argue that directors contribute no additional value to the firm and may even lower its value if they act only as a rubber …
In a recent paper, we use the law protecting directors and officers of Nevada-incorporated firms from liability to study how such laws relate to corporate tax avoidance. Under the 1987 law, those directors and officers are liable only if …
Directors, officers and other fiduciaries (together, “fiduciaries”) owe two primary duties to a corporation and its shareholders: the duty of loyalty and the duty of care. The duty of loyalty requires that fiduciaries make business judgments in the honest and …
“Common Ownership” arises when shareholders hold substantial stakes in different firms that impose externalities on each other, and it challenges the assumption that firms act to maximize their own profits. While firm decisions are ordinarily made by its board of …
On May 13, 2022, a judge of the Los Angeles County Superior Court ruled in Crest v. Padilla, Case No. 19STCV27561, that California’s statute requiring California-based public companies to have one to three women on their boards of directors (S.B. …
The ever-evolving challenges facing corporate boards prompt periodic updates to a snapshot of what is expected from the board of directors of a public company—not just the legal rules, or the principles published by institutional investors and various corporate and …