Adding more outside directors may worsen corporate fraud | UFla

[ima_sinnic]

This from the University of Florida News web page:

ADDING MORE OUTSIDE DIRECTORS MAY WORSEN CORPORATE FRAUD, DECEPTION

July 30, 2003
Contact Information
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GAINESVILLE Fla. --- While many corporate reform advocates urge companies to add outside board members to guard against corporate fraud and deception, that approach may actually exacerbate an already massive problem of directors being too cozy with the very people they’re supposed to be overseeing, University of Florida researchers say.

"Simply putting someone on a board who’s an outsider who has some status because of political or business connections or whatever, doesn’t ensure stockholder representation," said Henry Tosi, a professor of management at UF’s Warrington College of Business who conducted the research. "The appearances are such that it does, but our research shows that’s not the case."

The findings are particularly relevant as they come in the wake of a July 15 Securities and Exchange Commission report citing the need for tougher rules regarding the selection of corporate directors.

Drawing on years of their own research on various aspects of CEO pay and corporate governance and other studies, UF researchers set out to determine how chief executives are able to so completely control corporate processes---often without much regard for the interests of the stockholders. That control has set the stage for scandals of the magnitude of Enron and WorldCom, said Tosi, whose findings are published in the current issue of Organizational Dynamics. . . .

http://www.napa.ufl.edu/2003news/corporateboards.htm

[rapier]

1. same old same old

Outside directors are notorious rubber stamps. It's their job. Show me an outside director with some backbone and I'll show you an ex outside director. So much better to spend four weekends a year on the companies dime at the finest motels with limo service for a few hours of meetings and $100K or whatever a year.

Democracy does not work for corporations. The pretense of their democratic nature however is an invaluable tool in their intellectual war against government.

On a related note the year old Sarbanes-Oxley Act has amounted to nothing. Corps still play the "beat by a penny' game and 'investors' love it.

Read the subversive Bill Fleckenstein who is on MSN's web site of all places for the details.
http://moneycentral.msn.com/content/p56519.asp