Good Corporate Governance Is Good For Shareholders
Corporate governance is the system used by a board of directors to manage its company. When effective, the procedures and policies implemented will ensure the company’s long-term success. In a nutshell, corporate governance spells out how decisions are to be made within a publicly-traded company. Effective, well-thought-out corporate governance policies promote accountability, efficiency, and transparency in management. As explained by Dr. Patricia Harned, CEO of the Ethics & Compliance Initiative, sound policies help “to safeguard the culture of the organization and ensure that a high standard of conduct is central to business strategy.” (Source: Forbes). “Corporate governance is more than declassifying boards or completing a social responsibility report – it is about making sure companies’ governance processes address conflicts, align interests and increase the likelihood of good decision making so that companies are able to reach their objective of maximizing long-term performance and shareholder value.” Hye-Won Choi, Head of Corporate Governance at TIAA-CREF. Robbins LLP’s attorneys have earned a strong reputation as stalwarts of investors’ rights. We welcome inquiries from investors who are concerned about the corporate governance of companies they have invested in.
What Are The Effects Of Bad Corporate Governance?
Bad corporate governance harms the corporation’s reliability, integrity, and financial health. Corporate executives have obligations to shareholders. When those obligations go unfulfilled, shareholders lose confidence in the company’s business and the company’s reputation suffers. Shareholders may sell their stock, thereby reducing the corporation’s value and damaging its remaining shareholders.
Bad Corporate Governance Includes:
- Failing to adhere to the company’s fundamental principles
- Allowing executives to make misleading statements that harm the company
- Allowing for illegal insider trading activities
- Allowing illegal conduct that violates the Foreign Corrupt Practices Act
- Allowing CEOs to fulfill multiple roles in various committees, squelching the autonomy of board members
- Failing to provide for sound oversight of board committees
- Failing to ensure that board committee leaders and members are qualified for their roles
- Allowing executives to earn excessive compensation in comparison to their peers or in contrast to the value the company brings to its shareholders
- Allowing conflicts of interest to occur, such as when board members benefit from corporate transactions and when the family of board members earn board positions without proper qualifications or receive special contracts for services
Why Choose Robbins LLP?Robbins LLP is a nationally recognized leader in securities litigation that has upheld shareholder rights time and again through effective shareholder derivative litigation. Our attorneys’ case outcomes have had a direct impact on corporate governance reforms adopted by more than 125 companies in the Fortune 1000. Founded in 2002, Robbins LLP has been:
- Named a “serious player” in shareholder rights litigation by the National Law Journal’s Litigation Boutique Hotlist
- Identified as a Top 25 Boutique Law Firm in California by the Daily Journal
- Acknowledged annually as the Best Law Firm by U.S. News and World Report