U.S. Corporate Governance: Accomplishments and Failings
A Discussion with Michael Jensen and Robert Monks
Moderated by Ralph Walkling
Two of America's best-known advocates of shareholder activism and governance reform discuss recent proposals to increase shareholder “democracy” in the U.S., the perennial controversy over executive pay, and lessons for public companies in the successes (until recently) of private equity. While addressing the shortcomings of U.S. governance, both Monks and Jensen assert the superiority of the U.K. system, with its reliance on “independent-minded” non-executive chairmen and “extraordinary general meetings.”

Changes in Korean Governance: A Response to Crisis
E. Han Kim and Woochan Kim
The Korean financial crisis in 1997, caused in part by corporate governance failures at family-controlled business groups known as chaebol, led to a number of reforms. New laws and regulations designed to increase corporate transparency, oversight, and accountability have had clearly positive effects on governance measures. However, many chaebol-affiliated companies have resisted such reforms and their lobbying efforts have succeeded in reversing some of the previous gains.

Corporate Governance in India
Rajesh Chakrabarti, William Megginson, and Pradeep Yadav
The Indian corporate governance system has both supported and held back India's ascent. Ownership remains concentrated and family business groups continue to be the dominant business model, and enforcement of investor protection remains a problem. Yet beginning with reforms in 1991, Indian corporate governance has taken major steps toward becoming a system capable of inspiring confidence among institutional and, increasingly, foreign investors.

Sovereign Wealth Funds: A Growing Force in Corporate Finance
Shams Butt, Anil Shivdasani, Carsten Stendevad, and Ann Wyman
Sovereign wealth funds (SWFs) have emerged as among the most important players in global financial markets, with an estimated $3 trillion and growing. SWFs have shown a wide range of investment objectives, along with continuously evolving time horizons and risk appetites. However, the rising prominence and perceived lack of transparency of SWFs have raised concerns among governments and other market participants that could lead to regulation of their activity.

NACD Roundtable on What Public Company Directors Should Know about Private Equity
Panelists: Robert Kindler and David Wilson. Moderated by James Gunderson
The panelists discuss the role of “special committees” in managing conflicts of interest among top management when faced with (or seeking) bids to take their companies private. Among the board's most important responsibilities are establishing and maintaining a competitive bidding process, while regulating the flow of information in a manner commensurate with the “seriousness” of the bid.

The Corporate Social Responsibility (CSR) Trend
Barbara Lougee and James Wallace
This article presents new evidence on the amount, value impact, and motivation of “investment” in corporate social responsibility (CSR). Companies that scored higher on CSR measures over the period 1991-2005 produced higher ROA. Most companies devote resources to CSR initiatives as a means of maximizing long-run value rather than out of a prior commitment to stakeholders.

Leadership Structure and Corporate Governance in Switzerland
Markus Schmid and Heinz Zimmermann
The ongoing debate over the merits of separating the CEO and Chairman roles has yet to be resolved. In this study of Swiss companies, where separation has long been the rule, there is no evidence of a systematic difference in valuation between companies with combined and those with dual leadership. The authors report that CEO/chairmen tend to have larger percentage ownership, serving as a check on potential “agency costs.”

Who Charges More: Hedge Funds or Mutual Funds?
Mark Kritzman, Windham Capital Management Corp.
Typical mutual fund fees appear far lower than hedge fund fees. However, a very high percentage of mutual fund performance is due to passive exposure to the market. An example shows that combining an index fund and hedge fund can replicate the returns of a mutual fund at a similar cost, implying that the implicit fee for the mutual fund's small active component is comparable to a hedge fund.

Morgan Stanley's Approach to Assessing Credit Risks in the Microfinance Industry
Miguel Arvelo, Ju-Lie Bell, Christian Novak, Juliette Rose, and Shally Venugopal
Growth in the microfinance sector has created a need for more reliable and precise methods for assessing the risks of microfinance institutions. Morgan Stanley has created a comprehensive internal credit analysis and rating methodology—one that, by producing global scale ratings, enables its analysts to assess and compare risks both within the growing microfinance sector and relative to other sectors.