Putting Investors First: Real Solutions for Better Corporate Governance

by John C. Bogle and Scott Newquist

Book Overview

Corporate governance has become a leading topic in post-Enron boardrooms. This book explores why checks and balances failed and how investor trust can be regained. It presents the specific actions... This description may be from another edition of this product.

• Format: Hardcover
• Language: English
• ISBN: 1576601412
• ISBN13: 9781576601419
• Release Date: August 2003
• Publisher: Bloomberg Press
• Length: 240 Pages
• Weight: 1.05 lbs.
• Dimensions: 0.9" x 5.8" x 8.5"

Customer Reviews

Insights into the Sources of Poor Public Company Ethics

The subtitle for this book is a little misleading. The solutions the book suggests are found only in the foreword by John C. Bogle and in the final chapter by Scott C. Newquist and Max B. Russell. Almost all of the material in the book describes instead why corporate governance hasn't worked well in the last two decades in the United States. To me, the best part of the book was in Mr. Bogle's foreword. He points out that no amount of regulation is going to fix corporate governance. Instead, business and financial leaders should seek to set a good example based on their values and principles. With good character in place, some structural changes can really help. He encourages leaders to stop chasing speculative shifts in stock price, and to focus instead on creating long-term enterprise value for shareholders.In the main book, the authors describe the current crisis in investor confidence and the need to align executive and director interests with serving all shareholders (past, current and future). For those who are new to the financial markets, they then take the time to explain how stock options for executives work, how some companies try to "game" the market by over promising and providing misleading financial results, and ways to spot companies which are distorting their results.Like Mr. Bogle, they also espouse taking a long-term approach to creating discounted cash flow value for the enterprise. I thought the weakest part of the book was a long explanation of how stock values are created. This explanation certainly captures how a minority of investors behaves, but does not come close to describing the overall market environment.In developing how a board should work, the authors draw on democratic principles. They view the five cornerstones of good governance as being adherence to duty of loyalty to shareholders (rather than management), duty of care (in looking for potential problems), consistency of practice across all public companies, avoiding exceptions in dealing with issues, and putting all share holders' interests first. To ensure these results, the authors have a number of novel recommendations. First, the directors should take an oath of independence and care annually. Second, managements and boards should greatly increase transparency and fair disclosure except where a competitive advantage would be lost. This would mean disclosing information that investors would care about even if it isn't material in the legal sense of the word. Boards need mechanisms to communicate directly with shareholders and should have a staff to help with this. At least once a year, independent board members should meet in a public session with institutional shareholders to hear their concerns. Third, investors should have a choice of potential directors. This means that more than one qualified candidate should be proposed for each open seat on the board. Investors should have the right to pool their votes behind a single candidate. I

Focuses on the importance of having a balance of power

Co-written by Schott C. Newquist (the co-founder of Board Governance Services, a consulting firm to corporate directors), and professional business writer Max Russell, Putting Investors First: Real Solutions For Better Corporate Governance is a no-nonsense financial investment guide especially intended for board members, corporate executives who work with them, and investors large and small with a keen interest in the governance of the corporations in which they own shares. Warning that effective change is unlikely to come from legal regulation since the spirit of the law can be thoroughly twisted while adhering to the letter, Putting Investors First focuses on the importance of having a balance of power, basic principles of good governance, how to align interests and much more. If you are an investor or are called upon to be responsible to corporate stockholders, then you need to give a close and careful reading to Putting Investors First.