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Abstract:
This paper argues that social reporting can be an important form of New Governance regulation to achieve stakeholder accountability. Current social reporting practices, however, fall short of achieving stakeholder accountability and actually may work against it. By examining the success and failures of other transparency programs in the United States, we can identify key factors for ensuring the success of social reporting over the long term. These factors include increasing the benefits-to-costs ratios of both the users of the information and the disclosers, and recognizing the importance of the involvement of third-party intermediaries.

Social reporting, sustainability reporting, social responsibility, regulation

Abstract:
This paper assesses the ability of the Sarbanes-Oxley Act, the revised Organizational Sentencing Guidelines, and other changes affecting the governance of corporations, to reduce the incidence of fraud and to increase the reporting of financial misconduct. In Part I, I look specifically at the individual decision-makers within the organization and the ethical problems they face. To understand the individual's decision, I use of the Theory of Planned Behavior (TPB). The TPB is a widely tested theory from the field of social-psychology. It is a parsimonious model but has significant power in explaining variations in intentions. The simplicity of the model also makes it useful for understanding and explaining the various studies that have been conducted on ethical behavior in organizations. In Part II, I move upward to the level of the organization and examine its influence on the employee's intentions and behaviors. Part II.A reviews the research on managing ethics and compliance programs, while Part II.B analyzes compliance programs through the TPB. With that understanding, Part III takes another step back to consider how legislation such as Sarbanes Oxley, or the Organizational Sentencing Guidelines, does and can influence corporations to take actions that will improve the ethical behavior of their employees.

Ethics, Compliance, Corporate Culture, Sarbanes-Oxley

Abstract:
In this article I examine corporate social reporting as a form of New Governance regulation termed democratic experimentalism. Due to the challenges of regulating the behavior of corporations on issues related to sustainable economic development, New Governance regulation - which has a focus on decentralized, participatory, problem-solving-based approaches to regulation - is presented as an option to traditional command-and-control regulation. By examining the role of social reporting under a New Governance approach, I set out three necessary requirements for social reporting to be effective: disclosure, dialogue with stakeholders, and the moral development of the corporation. I then assess current social reporting practices against these requirements and find significant problems. In response, I propose one option for solving those problems, and encourage future researchers to consider the demands of these three requirements and the possible trade-offs between them when attempting to find ways to improve social reporting practices.

Corporate social responsibility, Global Reporting Initiative, social reporting, sustainability reporting, regulation

Abstract:
In this paper, I bring together recent developments in shareholder activism, responsible investing, and "new governance" regulation, to consider the role of public pension funds as a surrogate regulator for corporate sustainable development. Although a handful of public pensions are active in issues related to sustainability, this paper provides evidence showing that the vast majority are not. These conclusions, and explanations for why this is the case, are based in part on a survey of public pension fund trustees conducted in fall 2006. I propose that public pensions be required to disclose the extent to which (if at all) they incorporate sustainability issues into their investment policies and practices. This proposal is consistent with new governance regulatory approaches that recognize the limits of traditional legal mechanisms in improving corporations' social and environmental performance and seek to harness the potential of informed and interested third-party actors to develop flexible and efficient regulation. Public pensions can serve a powerful role under this approach. These pensions have a natural interest in sustainable economic development, but there are hurdles in the way of their greater involvement. The disclosure requirement serves to motivate action and then continually improve the quality of their involvement. Evidence from a similar law in the United Kingdom supports these arguments. In addition, pensions are a catalyst for change, as their actions can spur greater consideration of long-term responsible investor issues throughout the financial industry. This proposal is not without potential pitfalls. Thus, I also discuss what additional reforms may be necessary to ensure the success of this proposal and respond to potential criticisms from those that believe public pensions will act primarily based on the private interests of politicians or special interest groups and not based on serving the best long-term interests of the corporation or society.

Public Pensions, Institutional Investors, Shareholder Activism, Social Investing, Sustainability

Abstract:
Over the past few years the Securities Exchange Commission (SEC) and Department of Justice (DOJ) have finally started making serious efforts at enforcing the United States' anti-bribery laws against corporations. These efforts will not be effective against the worst offenders, however, if they do not address the issue of corporate ethical culture. Over time, the use of improper payments can become embedded in a corporation's culture. The organizational actors treat payments of bribes, or the use of agents the company suspects of paying bribes, solely as economic issues and not as legal and ethical issues. Through the DOJ's use of deferred prosecution and non-prosecution agreements and the SEC's use of settlement agreements, these agencies are attempting to address these root causes of corruption in many corporations. These agreements typically require corporations to adopt more effective compliance programs and to retain independent corporate monitors to oversee the implementation process. This article analyzes the potential effectiveness of these agreements through a New Governance perspective and develops the idea of a Reform Undertaking. Based on the essential features for effectiveness that this article identifies, Reform Undertakings have a lot in common with the currently used deferred prosecution agreements and SEC settlements, but there are also significant differences. Of primary importance is the role of the third party independent monitor. This Third Party should serve not as a simple monitor or as an all-powerful czar, but must take on facilitating and problem solving roles. These are roles which require significantly different sets of skills and characteristics than someone serving a monitoring role or a czar role. Overall, through the use of a New Governance perspective, this article identifies essential features of Reform Undertakings that can more effectively tackle the root cause of persistent corrupt behavior by corporations - the corporation's ethical culture - than alternative regulatory mechanisms.

Bribery, Compliance Programs, Corporate Culture, Corruption, Deferred Prosecution Agreements, FCPA, New Governance, Organizational Ethics

Abstract:
This article contributes to the debate on public pensions by considering empirical evidence on the systematic impact of different governance structures and practices on pension fund performance. After an introduction to public pension governance in Part I, the next section discusses the growing evidence that political influence has a significant impact on pension systems' funding decisions and on the selection of actuarial assumptions that affect the sponsor government's required contributions to the plan. Part III provides a review of the research on pension funds' investment performance and the potential for political influence to cause lower returns. Part IV presents an empirical analysis that further investigates the findings of previous studies and considers additional governance factors that may have a significant impact on pension fund performance and strategic actions. Part V discusses the policy implications, including the importance of member-elected trustees and the need for improving the training of trustees.

Public Pensions, Governance

Abstract:
Over the last few years, prosecutors and SEC enforcement attorneys have increasingly relied on settlement agreements (such as deferred prosecution agreements) to combat securities violations and other corporate criminal acts. Many of these agreements require the use of corporate monitors to oversee the corporation's compliance with the settlement and its implementation of a compliance program to prevent future violations of the law. Although these agreements have received significant attention from legislators and scholars, there has been no investigation into the critically important question of whether or not the use of corporate monitors achieves its intended goals. Based primarily on interviews with individuals directly involved in monitorships, we look at the entire monitorship process - including the selection of the monitor, how the monitor conducts his or her work, and what happens after a monitorship - and find that decisions at critical points during this process lead to monitorships that are significantly less ambitious than government pronouncements behind them and seem unlikely to achieve their goals on any consistent basis. After identifying these problems, we suggest measures for reform.

Compliance Programs, Corporate Crime, Corporate Culture, Corruption, Deferred Prosecution Agreements, FCPA, Monitors, Organizational Ethics

Abstract:
This article considers what policy reforms may help catalyze corporate commitment to combating corruption. The starting point for this discussion is a voluntary, corporate principles approach to self-regulation. Such an approach should seek to encourage corporations to implement effective compliance and ethics programs and to disclose information related to their anti-corruption activities to relevant stakeholders. Policy reforms discussed in this article that have the potential to support these goals, and are in need of further research and discussion, include amnesty programs for corporations that self-disclose corrupt payments, the use of corporate monitors in the enforcement of anti-corruption laws, sustainability reporting indicators related to bribery, the prohibition of all forms of corruption (including private-to-private corruption and facilitation payments), and the implementation of multi-stakeholder initiatives to support a corporate principles approach.

Bribery, Corporate Monitors, Corruption, Facilitation Payments, Multi-Stakeholder Initiatives, Private-to-Private Corruption, Sustainability Reporting

Abstract:
In response to pressures to be more socially responsible, corporations are becoming more active in global communities through direct involvement in social initiatives. Critics, however, question the sincerity of these activities and argue that firms are simply attempting to stave off stakeholder pressures without providing a corresponding benefit to society. By drawing on institutional theory and resource dependence theory, we consider what factors influence the adoption of a meaningful social initiative - an initiative that is sustainable and has the potential for a significant positive impact on society - as opposed to a symbolic initiative. In addition, we raise the question of how social initiatives - both meaningful and symbolic - participate in the institutional war over the meaning of corporate social responsibility.