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1、Corporate GovernanceCHAPTER 18CHAPTER OUTLINEPublicly Traded CorporationsCorporate Form of OrganizationStock ExchangesStock Ownership PatternsGovernance ObjectivesSeparation of Ownership and ControlIncentive IssuesSurvival of CorporationsBenefits of Publicly Traded CorporationsTop-Level Architecture
2、 in U.S. CorporationsSources of Decision RightsShareholdersBoard of DirectorsTop ManagementExternal MonitorsInternational Corporate GovernanceMarket ForcesSarbanes-Oxley Act of 2002Corporate Governance: An Historical PerspectiveSummaryWeb Appendix: Choosing among the Legal Forms of OrganizationBerna
3、rd “Bernie” Ebbers had worked as a bouncer, milkman, high school bas-ketball coach, and hotel operator. He met with business partners at a coffeeshop in Hattiesburg, Mississippi, in 1983 to sketch out an idea for a long-distance telephone company on the back of a napkin. This legendary meetingresult
4、ed in the formation of a company named LDDS (Long Distance Discount Ser-vice). The company purchased long-distance phone services from AT&T using volumediscounts and resold the services to small businesses. Effectively, it took advantage ofATTs price discrimination strategy (see Chapter 7). LDDS gre
5、w very rapidly throughacquisitions and mergers, changing its name to WorldCom in 1995. Its $40 billionacquisition of MCI in 1998 was, at the time, the largest merger in history. By 2000,WorldCom had become a global communications company with $39 billion in annualrevenues.bri75829_ch18.qxd 9/5/08 10
6、:15 AM Page 562Chapter 18 Corporate Governance 563WorldCom was one of the “darlings of Wall Street” during the 1990s with its stockreaching a high of $64.51 in June 1999. CEO Bernie Ebbers owned 27 million sharesvalued at $1.2 billion in May 2000. His 500,000-acre ranch in British Columbia wasthe la
7、rgest working ranch in Canada. Ebberswith his cowboy boots, colorful back-ground, beard, and informal stylewas a folk hero who epitomized the “AmericanDream.”WorldComs growth stalled when the Department of Justice blocked its $129 billionacquisition of Sprint in July 2000. The stock price fell preci
8、pitously from that point andby January 2002 was below $10 per share. Ebbers resigned as CEO in April 2002. InJune 2002, WorldCom announced that it had understated line costs in past accountingstatements by over $3.85 billion. Expenditures that should have been recorded asexpenses according to Genera
9、lly Accepted Accounting Principles (GAAP) had beenrecorded as assets. The company filed for bankruptcy in July 2002the largest filing inhistory. The bankruptcy was followed by an announcement that WorldComs incomehad been overstated between 1999 and 2002 by an additional $3.8 billion.The U.S. Depart
10、ment of Justice charged the top officers of WorldCom with fraud.The chief financial officer and several other managers pleaded guilty and agreed to testifyagainst Ebbers. Ebbers was convicted on nine counts of fraud in 2005 and sentencedto 25 years in jail. Members of the board of directors settled
11、shareholder lawsuits byagreeing to pay over $20 million out of their own pockets. Stock analysts who hadtouted the stock encountered heavy criticism and legal problems, as did the auditor,Arthur Andersen. “Star” telecom analyst Jack Grubman, who covered WorldCom forSalomon Smith Barney, agreed to pa
12、y millions of dollars and accept a permanent barfrom the securities industry to settle legal charges. Major investment and commercialbanks, such as Citigroup, JPMorgan Chase, ABN Amro (Holland), Tokyo Mitsubishi( Japan), Goldman Sachs, and UBS (Switzerland), settled lawsuits by agreeing to paybillio
13、ns of dollars to WorldCom investors for their alleged part in facilitating thefraud.The collapse of WorldCom, along with other governance scandals (such as Enron,Tyco, Adelphia, and Global Crossing), led many to question whether the U.S. corporategovernance system is fatally flawed. In response, Con
14、gress passed the Sarbanes-OxleyAct of 2002the most important corporate disclosure and governance legislation sincethe 1930s. Subsequent business scandals at international companies, such as Parmalat(Italy), Royal Ahold (Netherlands), Shell (Netherlands/UK), and SK Global (SouthKorea), highlighted th
15、at corporate governance is a global issue.Corporate governance is the popular term for describing the organizational architec-ture at the top of the firm. Top-level incentives and the partitioning of decision rightsamong shareholders, the board of directors, top management, and outside monitors(such
16、 as independent auditors and banks) are critically important issues in publiclytraded corporations. Corporate governance is a topic that requires volumes to cover indepth. This chapter presents a broad overview of corporate governance utilizing the or-ganizational architecture framework developed in previous chapters. Our objectives arefor the reader to obtain a general understanding of the key issues in corporate gover-nance and insights into how to design more effective governan
