The issue of appropriate corporate governance framework has been a focal point of recent reforms in many countries. This study provides a comprehensive comparative analysis of corporate governance regulatory systems and their evolution since 1990 in 30 European countries and the US. It proposes a methodology to create detailed corporate governance indices which capture the major features of capital market laws in the analyzed countries. The indices indicate how the law in each country addresses various potential agency conflicts between corporate constituencies: namely, between shareholder and managers, between majority and minority shareholders, and between shareholders and bondholders. The analysis of regulatory provisions within the suggested framework enables us to understand better how corporate law works in a particular country and which strategies regulators adopt to achieve their goals. The 15-year time series of constructed indices and large country-coverage also allows us to draw conclusions about the convergence of corporate governance regimes across the countries

This paper studies the impact of the 2003 SEC Regulation requiring shareholder approval of all equity-based executive compensation plans on executive compensation policies and practices at S&P 500 firms. Following the 2003 Regulation, firms with shareholder approved equity plans in place or those with strong performance, while not those with non-approved plans or weak performance, increase their equity compensation proposal submission activity. The quality of equity compensation proposals improves in the after-regulation period, and shareholders exhibit greater scrutiny and monitoring of executive compensation through increased voting rights. We find a decline in the equity pay component while an increase in the cash component of total executive compensation after the 2003 Regulation and also provide evidence that the 2003 Regulation contributes to this change in compensation structure

We analyze how the structure of executive compensation affects the risk choices made by bank CEOs. For a sample of acquiring U.S. banks, we employ the Merton distance to default model to show that CEOs with higher pay-risk sensitivity engage in risk-inducing mergers. Our findings are driven by two types of acquisitions: acquisitions completed during the last decade (after bank deregulation had expanded banks' risk-taking opportunities) and acquisitions completed by the largest banks in our sample (where shareholders benefit from ‘too big to fail’ support by regulators and gain most from shifting risk to other stakeholders). Our results control for CEO pay–performance sensitivity and offer evidence consistent with a causal link between financial stability and the risk-taking incentives embedded in the executive compensation contracts at banks

Motivated by SEC regulations requiring a majority of independent directors on corporate boards, we examine director informativeness and ability by observing the trading performance of independent directors who serve on multiple boards. As a proxy for informativeness, we find positive trading performance relative to purchases and sales. More impressive, these performance opportunities appear to be available to market participants who observe directors' Form 4 trades. We do not find evidence that diversification motives or busyness affects director trading performance. On the other hand, we do find that audit and compensation committee memberships enhance director trading performance on the sales side but that committee membership does not affect the profitability of director purchases. In comparison, multi-firm directors out-perform single-firm directors and this performance differential seems to be more attributable to superior ability than to better information

I analyze directorships held by CEOs who retired during the periods 1989–1993, 1995–1999 (before the Sarbanes–Oxley Act) and 2001–2005 (after the Sarbanes–Oxley Act). My results suggest that retired CEOs became less popular on boards after the Sarbanes–Oxley Act. In addition, although pre-retirement accounting performance helps explain the number of outside directorships a retired CEO held in the 1989–1993 sample, as Brickley et al. (1999) have found, it does not explain this number for the 1995–1999 sample and 2001–2005 sample. Third, a company's stock performance during a CEO's tenure is negatively related to the number of outside directorships only in the 2001–2005 sample. Fourth, the number of outside directorships is positively correlated with the size of a retired CEO's original firm before the Sarbanes–Oxley Act, but this is not the case after the Sarbanes–Oxley Act. Finally, if retired CEOs worked in regulated industries, their probability of serving at least one outside directorship 2years after retirement falls by 21% in the 1989–1993 sample. However, this negative effect is marginally significant in the 1995–1999 sample, and vanishes in the 2001–2005 sample