When the world’s largest financial institutions had to be rescued from insolvency in 2008 by massive injections of governmental assistance, many blamed corporate boards for a lack of oversight. This was a problem we had supposedly solved nearly a decade ago, when blatant failures of corporate governance (remember Enron?) prompted Congress to pass the Sarbanes-Oxley Act.
Respected Finance Veteran Proposes Professional Boards
By Amanda Gerut February 14, 2011
In the wake of the financial crisis, the work of corporate directors has come under intense scrutiny, with some critics calling for change.
A recent Harvard Business School article proffered one of the more radical visions: a new corporate director archetype in which typical directors are paid twice as much, spend double the amount of time they currently do on board matters and are seasoned experts in the main line of business of the company they oversee. Continue reading
Robert Pozen Discusses New Book “The Fund Industry” [Bloomberg Audio]
Robert Pozen, chairman emeritus of MFS Investment Management, discusses his 2011 book “The Fund Industry: How Your Money is Managed” with Bloomberg’s Pimm Fox and David Wilson. They spoke on Bloomberg Radio’s “Taking Stock.”
The Fund Industry: How Your Money is Managed [Wiley]
Written by Robert Pozen and Theresa Hamacher, Fundamentals of the Fund Industry is the most in-depth and up-to-date guide to navigating the mutual fund industry, written in an accessible style with many examples and charts.The Fund Industry details how mutual funds are marketed, regulated, and invested in stocks and bonds. The book also describes the critical factors needed to choose a specific fund for your investment or retirement plan, including what to look for when reading prospectuses, shareholder reports and third party reviews. In addition, the book:
- Discusses the spread of mutual funds to Asia, Europe, and Latin America
- Compares mutual funds to other investment vehicles such as hedge funds and ETFs
- Shows how to sort mutual funds by categories and subcategories based on security type and investment objective
How to keep audit committees in the know [Financial Times]
American and British regulators agreed recently to an information-sharing arrangement, which they believe would have helped.
A New Model for Corporate Boards [Wall Street Journal]
In 2002, Congress passed the Sarbanes-Oxley Act to prevent corporate governance debacles like Enron and WorldCom from happening again. But six years later, many of the largest U.S. institutions had to be rescued by massive federal assistance. All of these institutions were Sarbox-compliant: Most members of their boards were independent, and their auditors’ reports showed no material weaknesses in internal controls. So why were the reforms so ineffective?
The Big Idea: The Case for Professional Boards [Harvard Business Review]
Sarbanes-Oxley did little to improve corporate oversight. What’s needed now is not another layer of legal procedures but a new culture of governance in which board service would be the primary occupation of independent directors.
A Social Security Proposal We Can All Live With [Harvard Business Review]
There are a limited number of big items in the US budget. Large cuts in defense are unlikely and healthcare is a political football. Restoring Social Security to solvency, as difficult as it seems, is our best first step toward fiscal discipline, as well as a worthwhile goal in itself.