Governance and Risk [Hardcover]

George Dallas (Author)

Book Description

Publication Date: January 21, 2004 | Series: Standard & Poor's Press

An analytical handbook for investors, managers, directors and stakeholders

"Comprehensive in scope and cross-disciplinary in analysis, Governance and Risk examines the problem of corporate governance from a wide variety of perspectives. The authors begin with the premise – correctly in my view – that corporate governance is, at is core, an important risk factor for any corporation. Through this conceptual prism, they employ economic, legal and social analyses – and draw on examples from 12 jurisdictions – to provide fresh insight into how we should best understand and govern the inherently conflicting interests that comprise the modern corporation. Anyone seeking a rigorous analysis of these issues – from directors, managers and lawyers to shareholders, corporate and community activists – should include this volume in their reading. It is an important addition to the corporate governance literature in this post-Enron age." ―Ira Millstein is a senior partner in the international law firm of Weil, Gotshal & Manges LLP

"This is a courageous and successful effort to classify what has never before been analyzed and presented in such a comprehensible manner." ―Robert A.G. Monks, Principal, LENS Asset Management

"Governance and Risk is an excellent piece of work. It is a comprehensive and carefully written manual that will be an invaluable source of information for managers and investors. It deserves careful study by anyone with an interest in the management of firms. It should make a significant contribution to the improvement of corporate governance of corporations around the world." ― Colin P. Mayer, Professor, Said Business School, University of Oxford

"I have found Governance and Risk to be one of the most comprehensive surveys of the field. It is an excellent reference work." ―J. Mark Mobius, PhD, President, Templeton Emerging Markets Fund, Inc.

"This is an important, timely book which brings much needed rigour and discipline to the analysis of corporate governance practices. If you are looking for a reliable guide through the confusing maze of corporate governance, this book is an excellent place to start."―Paul Coombes, Director, Corporate Governance Practice, McKinsey & Company, Inc.

Effective corporate governance has long been viewed as essential for healthy capital markets. Careless and inefficient governance practices, however, have thrust the governance debate from the shadows to the forefront, and corporate governance can now be recognized as a stand-alone risk factor.

Many market participants now question whether true self-governance is possible or even realistic in today's era of razor-thin profit margins and bloated executive paychecks.

This all-encompassing book compiled and edited by George Dallas, managing director and global practice leader of Standard & Poor's Governance Services unit. It includes contributions by senior members of Standard & Poor's Governance Services group, as well as from other experts in the area of corporate governance. The book offers the following benefits:

• Provides a wide-ranging discussion of methodologies and criteria relating to corporate governance analysis;
• Brings together diverse country environments in a common analytical framework;
• Seamlessly links up-to-date conceptual and theoretical thinking about governance to practical performance issues;
• Explores broader themes of governance-sustainable development, directors and officers insurance, behavioral aspects, and approaches to governance in managed funds and governments.

Highly publicized collapses in governance have replaced calm and complacency with vigilance and even stridence, often obscuring valuable and necessary aspects of governance that are long-overdue for discussion and review.

Governance and Risk presents a balanced and rational approach to one of today's most emotional topics. It also outlines an analytical model for both evaluating the governance practices of individual corporations and protecting yourself or your organization from the effects of incomplete, inaccurate, and potentially misguided practices.

Editorial Reviews

From the Back Cover

An Authoritative Global Framework for Understanding and Benchmarking Risks Related to a Company's Governance Policies and Practices

As each new corporate governance debacle dominates world headlines, demands for strengthened regulatory oversight increase in both frequency and volume. Still, the fact remains that the most effective corporate oversight begins in the corner offices and boardrooms of the corporations themselves.

The Standard & Poor's Handbook of Governance & Risk addresses all aspects of this vital issue. Combining the knowledge and expertise of Standard & Poor's with incisive commentary from leading international contributors, this all-in-one book provides stakeholders and decision-makers with:

• An analytical framework for examining and benchmarking governance standards in individual corporations
• Insights into the governance impact and importance of ownership structure, shareholder rights, stakeholder relations, transparency, and an effective board to both internal and external governance
• Bases for evaluating and comparing governance practices across companies, countries, and cultures

Capital markets require trust and integrity to function effectively, yet these two qualities more than any other are called into question with each new report of corporate malfeasance and greed. The Standard & Poor's Handbook of Governance & Risk provides a framework for investors and other stakeholders to help assess the extent to which they should give global corporations their trust--and their money.

"The corporate governance debate continues to grow in prominence, as the combination of corrupt governance practices in certain cases, and merely substandard governance in less extreme situations, is taking its toll. This book is an analytical handbook for investors, stakeholders, and other analysts wishing to achieve a better practical understanding of key corporate governance issues in individual companies, (and) more effectively identify and manage governance related risks."

--From the Preface

Effective corporate governance has long been viewed as essential for healthy capital markets. Careless and corrupt governance practices, however, have thrust the governance debate from the shadows to the forefront, and corporate governance can now be recognized as a stand-alone risk factor. Many market participants now question whether true self-governance is possible or even realistic in today's era of razor-thin profit margins and bloated executive paychecks.

The Standard & Poor's Handbook of Governance & Risk provides a solid conceptual grounding on the principal themes of governance in today's global corporate arena. Straightforward and authoritative, with compelling insights into today's key micro (internal) and macro (external) corporate governance issues, this all-encompassing book:

• Provides a wide-ranging discussion of methodologies and criteria relating to corporate governance analysis
• Brings together diverse country environments in a common analytical framework
• Seamlessly links up-to-date conceptual and theoretical thinking about governance to practical performance issues
• Explores broader themes of governance--sustainable development, directors and officers insurance, behavioral aspects, and approaches to governance in managed funds and governments.

Highly publicized collapses in governance have replaced calm and complacency with vigilance and even stridence, often obscuring valuable and necessary aspects of governance that are long-overdue for discussion and review. The Standard & Poor's Handbook of Governance & Risk presents a balanced and rational approach to one of today's most emotional topics, and outlines an analytical model for both evaluating the governance practices of individual corporations and protecting yourself or your organization from the effects of incomplete, inaccurate, and potentially misguiding practices.

About the Author

George S. Dallas is managing director and global practice leader of Standard & Poor's Governance Services unit. This unit provides corporate governance evaluations on companies in developed and developing markets around the world. Dallas has been actively involved with the development of Standard & Poor's corporate governance analytical criteria and their application in markets throughout the world. His work and analysis have appeared in numerous books as well as professional journals.

Product Details

• Hardcover: 608 pages
• Publisher: McGraw-Hill; 1 edition (January 21, 2004)
• Language: English
• ISBN-10: 0071429549
• ISBN-13: 978-0071429542
• Product Dimensions: 9.3 x 6.3 x 1.8 inches
• Shipping Weight: 2.2 pounds (View shipping rates and policies)
• Average Customer Review: 5.0 out of 5 stars  See all reviews (2 customer reviews)
• Amazon Best Sellers Rank: #1,713,646 in Books (See Top 100 in Books)

Customer Reviews

Most Helpful Customer Reviews

2 of 2 people found the following review helpful:

5.0 out of 5 stars Most Comprehensive Framework of Corporate Governance as a Risk Factor Published, September 17, 2005

By 

James Mcritchie "Publisher" (Elk Grove, CA USA) - See all my reviews
(VINE VOICE)    (REAL NAME)   

This review is from: Governance and Risk (Hardcover)

This handbook presents the most comprehensive framework for corporate governance as a risk factor that I have ever seen. I have several books on my shelves that compare corporate governance systems in the US, UK, Japan, Germany and France but this one also includes Brazil, China, India, Korea, Russia and Turkey.

I also have plenty of handbooks for directors that describe various duties but Governance and Risk takes the most systematic approach. Each factor is accompanied by instruction, questions, as well as examples of strong and weak profiles.

The premise of rating analysis is that we can isolate and diagnose corporate governance factors that complement traditional credit and equity analysis. This book cites the usual studies, such as Corporate Governance and Equity Prices by Paul Gompers and Andrew Metrick, and a several I had missed, such as Disclosure Practices of Foreign Companies Interacting with U.S. Markets by Tarun Khanna, Krishna Palepu and Suraj Srinivasan.

The most unusual feature of the book is the large number of chapters that lay out the analytical framework used by Standard & Poor's Governance Services in its governance scoring and evaluation process for individual companies, starting with a thorough discussion of limitations. I was a little surprised to read this, assuming they would keep such information under lock and key.

The scoring methodology evaluates roughly 80 analytical factors. In contrast to a checkbox approach, weightings are not necessarily fixed. For example, share registration with an independent body may be relatively meaningless where common practice, such as in the U.S., but takes on greater weight in Russia, where companies serving as their own share registrars have been known to erase contentious shareholders from their books.

At Amazon.com use the "search inside" feature. You'll see the Contents drills in to the micro level in chapters such as

Ownership Structure and External Influences

Shareholder Rights and Stakeholder Relations

Transparency, Disclosure, and Audit

Board Structure and Effectiveness

Other parts cover macro issues and wider themes, various countries, and case studies. I was pleased to see that contrary to CalPERS' practice, for example, S&P believes it is "inappropriate to mechanically limit individual country assessments by some form of sovereign ceiling." S&P's system provides a positive incentive for individual firms to be the best they can be, even if headquartered in a weak country environment. By voluntarily adopting higher standards, such as listing in other countries, such firms can lower funding costs and provide growth opportunities.

The book treats this topic and most others with a fair degree of depth, discussing SEC disclosure requirements (20F filing), presentation of US GAAP accounts, more aggressive enforcement authorities, etc. Now, if I can get the CalPERS board to read this, perhaps they will stop blacklisting foreign companies with good corporate governance. CalPERS should take a country's risk factors into account but should rate individual companies on one scale and countries on another.

The S&P governance analysis isn't designed to uncover fraud and the authors write that the outlined evaluation "stops short of being an audit." Yet, I haven't seen such a thorough assessment tool elsewhere in book form. Standard & Poor's Governance Services recently announced they would no longer provide public corporate governance scores for U.S. companies. However, with Governance and Risk as their guide, any company could do its own self-assessment. It may lack the comparison data that S&P has no doubt compiled but those choosing to us this tool will have a laundry list of excellent questions, as well as profiles of effective vs. ineffective practices.

Investors and other stakeholders will find the book a ready reference for factors to consider when investing, voting proxies, or looking up common practices by country. While I am sad to see S&P cease its governance services in the U.S., I am delighted they have left such an important legacy in Governance and Risk. I know that I will be referencing the book for many years to come.

1 of 1 people found the following review helpful:

5.0 out of 5 stars Packed with Knowledge!, May 18, 2004

By 

Rolf Dobelli "getAbstract" (Switzerland) - See all my reviews
(HALL OF FAME REVIEWER)    (TOP 500 REVIEWER)    (REAL NAME)   

This review is from: Governance and Risk (Hardcover)

This may be the most thorough and methodical exposition of corporate governance and risk management now available. It is hard to imagine a facet of the subject this book does not address. Sustainable development, cross-border governance issues, directors' and officers' insurance, theory, practice - it's all here. The book does not aspire to be anything but comprehensive and factual. The section authors, each an expert in his or her subject, eschew any pretense of courting the reader with easy-to-read prose. They write not for the casual reader or the educated lay person, but for the professional with a consummate need to know the subject. That said, we believe this book should be part of every major corporate or business school library; it will have a long shelf life.