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Protecting Shareholders and Enhancing Public Confidence by Improving Corporate Governance: Hearing Before the S. Subcomm. on Securities, Insurance, and Investment of the S. Comm. on Banking, Housing, and Urban Affairs, 111 Cong. 8 (2009)(Statement of Professor John C. Coates IV, John F. Cogan, Jr. Professor of Law and Economics Harvard Law School).

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.