Restoring Trust in American Business
A Report of the Project on Corporate Responsibility
Recent business scandals reveal a disturbing breakdown of values in corporate America.
This book examines the failure of "gatekeepers" – corporate directors, auditors,
regulators, lawyers, investment bankers, and business journalists – to stand between
corporate misconduct and the public interest. Prominent scholars and corporate leaders
argue that market pressures have made gatekeepers too focused on financial self-interest
at the expense of the public good. Stronger professional standards are prescribed.
The contributors come from institutions ranging from Wall Street and the nation's
leading law and business schools to the AFL-CIO.
"This book could be subtitled The Road Back From Enron. It offers a moderate
and readable approach to letting American business back into civilized society on
a promise of good behavior – a promise that needs to be monitored."
–Daniel Schorr, Senior News Analyst, National Public Radio
"These essays present clear, concise and cogent analyses of why America lost trust
in American business and what must be done in order to restore that trust."
–Donald Keough, Former President and CEO, Coca-Cola Company
"This powerful collection of commentaries by the nation's most compelling thinkers
makes it clear that the engine that drives the markets is not money but integrity,
and that it takes a village of committed, principled, and vigilant participants
to make it work. It is filled with indispensable insights and practical advice for
executives, directors, investors, and policy-makers."
–Nell Minow, Editor, The Corporate Library, Co-author, Corporate Governance
"The editors have assembled a most insightful and thought-provoking series of essays
on the causes and potential solutions to the current crisis in corporate ethical
values and conduct. The contributors are wide-ranging in occupation and training
but uniform in terms of professional excellence and thought-leadership. Their conclusions,
and those of the Academy's Corporate Responsibility Steering Committee published
within, are intriguing. While there is significant difference in style and approach,
there are numerous points of consensus that will provide a good preliminary blueprint
for sound and meaningful reform."
–Charles M. Elson, Director, Weinberg Center for Corporate Governance, University
"What has gone wrong with corporate America and how can our society make things
right? This authoritative volume presents technical matters in reader-friendly terms,
as well as probing analyses, thoughtful recommendations, and critical discussion
of those recommendations."
–Howard Gardner, Harvard University, Senior Author, Good Work: When Excellence
and Ethics Meet
[Restoring Trust in American Business.] "Can we? How? A galaxy of academics, practicing
lawyers, leading lights of banking and business – a few of whom are former staff
members of regulatory agencies – even a journalist and trade unionist offer their
insights, reflections, prescriptions, hopes and doubts. The overall tone is positive,
but strong notes of skepticism are also sounded. Timely, important
and will remain so even as the current headlines on business malfeasance and corruption
move off the front page."
–Carl Kaysen, David W. Skinner Professor of Political Economy, Emeritus, MIT
Click here to view
book review in Bimonthly Review of Law Books, January/February 2005
Click here to view
book review in The IRE Journal, January/February 2005
Table of Contents
Leslie Berlowitz and Andy Zelleke
PART I MANAGERS: BEYOND REGULATION
The Inevitable Instability of American Corporate Governance
Mark J. Roe
Values and Corporate Responsibility: A Personal Perspective
John S. Reed
PART II REIMAGINING GATEKEEPER IDENTITIES
Management as a Profession
Rakesh Khurana, Nitin Nohria, and Daniel Penrice
The Regulators and the Financial Scandals
Donald C. Langevoort
The Professionalization of Corporate Directors
Martin Lipton and Jay W. Lorsch
Comment: Should Directors Be Professionals?
Margaret M. Blair
Comment: Professionalization Does Not Mean Power or Accountability
Comment: The Limits of Corporate Law in Promoting Good Corporate Governance
The Auditor as Gatekeeper: A Perilous Expectations Gap
William R. Kinney, Jr.
Comment: The Audit and the Auditor's Central Role
John H. Biggs
Professional Independence and the Corporate Lawyer
William T. Allen and Geoffrey Miller
Comment: The Dubious History and Psychology of Clubs as Self-Regulatory Organizations
Richard W. Painter
The Financial Scandals and the Demise of the Traditional Investment Banker
Felix G. Rohatyn
Comment: Toward A Higher Standard of Conduct in Investment Banking
PART III REPORT OF THE AMERICAN ACADEMY'S CORPORATE RESPONSIBILITY STEERING COMMITTEE
Journalists and the Corporate Scandals: What Happened to the Watchdog?
Corporate Responsibility Steering Committee
Steering Committee Report and Recommendations
About the Cochairs
About the Authors
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