Research into corporate governance can help to support rational thinking about how to improve corporate governance practice and underpin both market-led and policy-led initiatives. Objective academic evidence can also stimulate dialogue and lead to debate and consensus.
We recognise that corporate governance continues to evolve in response to a host of economic, organisational and regulatory influences. We therefore encourage interdisciplinary research on an international basis into corporate governance to inform policy, investment, business and accounting developments.
The following research suggestions are not meant to be exhaustive but are intended to help researchers in developing projects which would be interdisciplinary in nature, international in outlook and probing in their approach:
- Policy dialogue
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Regulatory conflicts: How effective have transatlantic meetings of regulators been in mitigating regulatory conflict and overload in the period since the Sarbanes-Oxley Act was passed? What evidence is there of the client acceptance procedures of global accounting firms and investment banks and the expectations of credit rating agencies setting de facto international standards of corporate governance?
Impact of regulatory burden: Is it possible to perform a post-implementation regulatory impact assessment on the Sarbanes-Oxley Act, or on Section 404 in particular? How can perceived over-zealous litigation and prosecution be measured along with its effects on the attractiveness of US capital markets?
Shareholder-led versus regulator-led corporate governance: To what extent are shareholders, sponsors and NOMADs effective in acting as quasi-regulators enforcing good corporate governance in the UK markets and how is their effectiveness perceived in the market?
Markets for corporate control: Does US and UK experience of post-takeover performance indicate that either country’s public policy on takeovers is effective in promoting the interests of shareholders or the wider economy?
- Investment dialogue
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Shareholder engagement and improved corporate performance: How difficult is it in practice for US and UK directors to identify beneficial owners of shares given hedge fund investments and the more prevalent use of CFDs and to what extent does this frustrate effective engagement?
Shareholder rights and company law: Is there any evidence that shareholder participation in fundamental decision-making has any beneficial or adverse impact on company or director performance?
Contrasting use of proxy proposals: Why do many shareholders not exercise their power to vote on proposals and resolutions? How can independent judgement be maintained and exercised even where there are apparent conflicts of interests, for example between private fund managers and their corporate clients or public fund managers and political leaders?
Shareholder influence on board composition: How effective have nominating committees been in ensuring that board composition better reflects shareholder wishes and interests in both the US and the UK?
Pre-emption rights: Does the lack of pre-emption rights in the US lead to higher or lower costs of capital compared to the UK?
- Business dialogue
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Duty of care and the Business Judgment Rule: Is the codification of directors’ duties in the Companies Act 2006 affecting directors’ behaviour in a way that will make the UK an even tougher environment for directors to operate in than the US?
Board balance and the role of non-executive directors: Does the Sarbanes-Oxley Act amount to a first step in developing federal corporate legislation in the way that it allots responsibilities to individuals rather than the board?
Separating or combining the roles of the Chairman and CEO: What evidence is there of the Lead Independent Director role in the US being an effective safeguard against concentration of power? What challenges have faced US companies adopting the UK model of separating the roles of Chairman and CEO?
Strengthening independence: What are the views of board members, investors and regulators on the effectiveness of board independence criteria in the US and the UK and is there any belief that a more principles-based approach might be feasible?
Level and make-up of executive compensation: What has been the impact of increased disclosure requirements in the UK on executive remuneration and what are the implications for policy makers? What do we know about what motivates CEO and executive performance and how might reward packages better reflect this knowledge?
Non-executive director incentivisation: Do the different approaches to non-executive remuneration in the US and the UK reflect differences of opinion amongst US and UK shareowners and, if not, is harmonisation possible? What evidence is there of possible adverse effects on non-executive director effectiveness of different types of remuneration?
- Accounting dialogue
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Disclosure controls: How have SEC registrants responded to the requirements of Section 302 of the Sarbanes-Oxley Act in the absence of authoritative rule-making or guidance on the subject? What evidence is there of companies outside the scope of Section 302 making similar changes in practice to those made by SEC registrants and why were such changes made?
IFRS convergence: What are the practical implications, if any, for standard setting of adopting a stewardship objective rather than relying exclusively on the objective of decision-usefulness? From the perspectives of management, auditors, investors, regulators and litigators, how successful have specific examples of detailed rule-making in accounting been in increasing the certainty and quality of financial reporting?
Timeliness of financial reporting: As the accelerated filing requirements in the US become effective, what have been the implications for reporting quality? How do analysts following US companies and analysts following UK companies differ in terms of their information sources and methods of analysis and to what extent is this influenced by the reporting of quarterly earnings in the US?
Convergence of auditing standards: How do regulators with responsibility for enforcement of auditing standards seek to influence the setting of those standards by the IAASB and other bodies and how successful are they?
Non-financial disclosure: What steps do companies and shareholders take to enhance the credibility of voluntary non-financial disclosures and how successful are they?
External audit and the role of audit committees: To what extent are formal differences in US and UK audit relationships and audit committee roles reflected in substantive differences in the perceptions and behaviour of management, auditors, audit committee members and shareholders in relation to the audit process?
To contact the ICAEW regarding corporate governance research suggestions, email: corporategovernance@icaew.com or telephone +44 (0) 207 920 8714.