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August 09, 2000
The Corporate Library Announces Research Awards
A leading website on corporate governance and performance highlights the growing body of research
in this area with its first annual awards.
SocialFunds.com --
An overwhelming majority of shareholder resolutions deal with corporate governance issues, the
balance of power among corporate executives, the Board of Directors, and shareholders that
determines who controls company policy. A pair of awards from The Corporate Library calls attention
to the inherent value of good corporate governance and the significance of shareholder initiatives.
 The First Annual Corporate Governance Research Awards
were announced last week by The Corporate Library, a website offering a variety of information on
corporate governance and performance issues. With a searchable database of over 20,000 books,
articles, and other documents relating to corporate governance throughout the world, The Corporate
Library is ideally suited to recognize excellent research in this area.
"These studies
provide important insights into the value of good governance, especially effective monitoring by
directors and shareholders," said Robert Monks, founder of The Corporate Library. "We were very
pleased to find so much thoughtful work being done in this area, and especially delighted to create
our first annual awards for two truly outstanding papers."
The winner of the non-academic
category award was "Investor Opinion Survey," by McKinsey & Company, the global management
consulting firm. The survey of 200 institutional investors throughout the world found that these
investors are willing to pay up to a 20 percent premium to invest in companies with good corporate
governance.
In the academic category, the winner was "Do CEOS Set Their Own Pay? The Ones
Without Principals Do," by Marianne Bertrand of Princeton University and Sendhil Mullainathan of
Massachusetts Institute of Technology. This study shows that companies with good corporate
governance are less likely to reward their CEOs for "luck," and more likely to base compensation on
true performance measures rather than overall market performance.
"These papers show what
we have suspected all along, that good corporate governance reduces the cost of capital," said
Monks. "As global investors seek investments on a global scale, the assurances of transparency and
accountability become even more important. Of all the studies we reviewed, these two provided the
most elegant and compelling proof of the value of good governance."
The Corporate Library
awards were announced simultaneously with the addition of "The Patterson Report," an analysis of
nearly 200 recent academic studies on corporate governance and performance. Written by Dr. Jeanne
Patterson, former professor at Indiana University and author of several studies on social
investing, the report categorizes studies to allow critical comparisons.
"The growing
academic focus on boards of directors and other governance elements provides a rich source of data
representing a range of analytical approaches," said Patterson said. "Definitions still differ,
even for terms like 'performance.' That's why it is essential to be able to survey the range of
what is out there in order to be able to evaluate the results of the studies."
While some
of the studies summarized by Patterson deal with more academic subjects, like the impact of changes
in proxy rules, many of the studies on shareholder actions would be instructive for concerned
investors. In combination with The Corporate Library awards, the Patterson Report is a valuable
addition to shareholder understanding of corporate governance issues.
"Shareholder focus
on corporate governance is beginning to produce results," said Monks. "That means that for the
first time we can get some real data on which corporate governance initiatives really make a
difference."
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SRI World Group, Inc. All Rights Reserved.
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