2006 Awards for Excellence

Citation

(2006), "2006 Awards for Excellence", Corporate Governance, Vol. 6 No. 5. https://doi.org/10.1108/cg.2006.26806eaa.001

2006 Awards for Excellence

The following article was selected for this year’s Outstanding Paper Award for

Corporate Governance: The international journal of business in society

"Are American corporate directors still ignoring the signals?"

Eugene H. FramRochester Institute of Technology, Rochester, NY, USA

H.J. ZofferUniversity of Pittsburgh, Pittsburgh, PA, USA

Purpose – This research study focuses on two critical questions. First, to what extent are US corporate directors now taking independent steps to protect stakeholders from future corporate de´baˆcles, such as Enron and Tyco? Second, how have these de´baˆcles personally impacted US corporate directors in other companies?

Design/methodology/approach – A total of 114 corporate business directors replied to a mail questionnaire.

Findings – Respondents reported that: the number of board-initiated voluntary changes being considered is very modest; managements are not doing a good job communicating changes in internal control procedures to boards; the recent corporate de´baˆcles caused only about 9 percent of director respondents to become uneasy about their directorships; greater ‘‘due diligence’’ is needed currently before accepting a board position (it is still an ‘‘honor’’ to be asked to join a board); some senior managers are not being realistic about the significant time commitment needed to be a director in the twenty-first century.

Research limitations/implications – Despite the modest sample size, the very broad range of the firms’ sales data suggests that the sample may be somewhat representative of US business boards. Other studies have been based similar size samples.

Originality/value – Recent changes in corporate governance have been less rigorous than reported, despite many press reports concluding that corporate America is in a period of accelerating change. Outside directors seem to be unwilling to confront management on critical issues. Consequently, US directors need to be more proactive in making changes, or stakeholders can look forward to continuing de´baˆcles like Enron, Tyco, and WorldCom.

Keywords Auditing, Boards of Directors, Corporate communications, Corporate governance, Organizational culture, United States of America

www.emeraldinsight.com/10.1108/14720700510583449

This article originally appeared in Volume 5 Number 1, 2005, pp. 31-8, of Corporate Governance: The international journal of business in society