Strategy+Business has a fascinating story (free subscription required) on how the "good governance" movement might actully be hurting investors:
But the sun is not yet shining on executive suites and boardrooms. For the first time in our research — the most comprehensive ongoing survey of the demographics and performance characteristics underlying chief executive succession worldwide — we are seeing evidence that the contemporary governance movement is presenting CEOs and boards with a leadership dilemma of “lady-or-the-tiger” dimensions. Despite the one-year respite, companies remain focused on firing overcompensated, underperforming chiefs — the rate of CEO dismissals increased by 170 percent from 1995 to 2003. Yet that singular obsession appears to be contributing to lower average shareholder returns.
The story is based Booz Allen Hamilton’s annual study of CEO succession, and the authors -- while not arguing against good corporate governence -- think that company leaders, directors, and shareholders should re-examine how such programs are conducted.
Posted by tgibbons at July 22, 2004 09:39 AM