Testimony of John C. Coates IV Before the U.S. Senate Subcommittee on Securities, Insurance and Investment on Proposed Corporate Governance Reforms

Abstract

The financial crisis has generated a renewed interest in financial regulation as well as corporate governance more generally, among both academics and lawmakers. A large number of bills have been introduced in the Congress to address one or more aspects of corporate governance, including most prominently the Shareholder Bill of Rights Act of 2009 (S. 1074), introduced by New York’s Senator Charles Schumer. The following testimony of Prof. Coates takes up three broad themes: (1) the need for corporate governance of financial institutions to differ from that of other companies, (2) the general weakness of academic and scientific evidence on corporate governance topics, and (3) the general need for carefully considered moderate reforms that can be revised as evidence develops over time. The testimony reviews the state of the evidence on specific, current policy proposals, including “say on pay,” splitting the chair and CEO roles, staggered boards, and proxy access.

JEL Classification: G18, G21, G22, G28, G30, G38, K22