Press Release

Academy Project on Corporate Responsibility Releases Report


Restoring Trust in American Business

A Report of the Project on Corporate Responsibility
Edited by Jay W. Lorsch, Leslie Berlowitz and Andy Zelleke, 2005
Martin Lipton, Jay Lorsch and Larry Sonsini, co-chairs

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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 of Delaware

"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

Table of Contents

Leslie Berlowitz and Andy Zelleke


Chapter 1
The Inevitable Instability of American Corporate Governance
Mark J. Roe

Chapter 2
Values and Corporate Responsibility: A Personal Perspective
John S. Reed

Chapter 3
Management as a Profession
Rakesh Khurana, Nitin Nohria, and Daniel Penrice


Chapter 4
The Regulators and the Financial Scandals
Donald C. Langevoort

Chapter 5
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
Damon Silvers

Comment: The Limits of Corporate Law in Promoting Good Corporate Governance
Michael Klausner

Chapter 6
The Auditor as Gatekeeper: A Perilous Expectations Gap
William R. Kinney, Jr.

Comment: The Audit and the Auditor's Central Role
John H. Biggs

Chapter 7
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

Chapter 8
The Financial Scandals and the Demise of the Traditional Investment Banker
Felix G. Rohatyn

Comment: Toward A Higher Standard of Conduct in Investment Banking
Gerald Rosenfeld

Chapter 9
Journalists and the Corporate Scandals: What Happened to the Watchdog?
Geneva Overholser

Corporate Responsibility Steering Committee
Steering Committee Report and Recommendations
About the Cochairs
About the Authors







Corporate Responsibility: Beyond Regulation

Martin Lipton, Jay Lorsch, and Larry W. Sonsini