vol. XV no. 3

				As major business scandals continued to mount over the summer, The State of Business turned to our faculty and industry experts to gather perspectives on how to address America's crisis in corporate governance. Specifically, we asked these scholars and CEOs how proposed new guidelines recently submitted to the SEC by the New York Stock Exchange (NYSE) might affect the critical situation of investor confidence. This article - written on the heels of Enron's collapse, Andersen's downfall and WorldCom's bankruptcy - summarizes their thoughts in the midst of the debate on what should be done to restore investor confidence in the nation's businesses. Reaction from CEOs At Hershey Foods, Chairman, President and CEO Richard Lenny believes his company is well positioned to implement the proposed NYSE guidelines. Lenny, a 1974 Robinson graduate in marketing, is the only inside director on Hershey's board, and Hershey already has specific corporate governance principles in place, such as having outside directors serve on committees. Lenny supports the NYSE recommended guidelines. The framing of these guidelines, he believes, resulted from a "good piece of exploratory surgery" in diagnosing problems in the current system. The guidelines will "help to get the ground rules straight," he said. "However, they may be insufficient in curbing examples of recent corporate governance behavior. What is needed beyond these guidelines is a high standard of ethics. There is a difference between full disclosure and full disclosure of bad practices. It is important that our companies run under the right principles, which comes down to the spirit of the law in addition to the letter of the law. Everything in business needs to operate at a high legal, moral and ethical standard." Lenny supports "an appropriate level of government regulation," believing the government has a fiduciary obligation to make certain regulations are in place. But, he remarked, "the government can't regulate integrity." Instead, business itself must hire ethical people who adhere to the rules. Like Lenny at Hershey, Chairman and CEO F. Duane Ackerman is the only insider on the board of directors at BellSouth, a company that already has adopted some 90 percent of the changes proposed by the NYSE. In July, Ackerman, a member of Robinson College's 2001 Business Hall of Fame, affirmed the importance of good corporate governance in an Atlanta-Journal Constitution article: "I think governance is important, I think responsibility is important, I think there are a lot of good people out there trying to do the right thing." Governance is especially important because, Ackerman noted, "customers can vote with their feet. At the end of the day, if you are not able to maintain their confidence and you are not in a position to do what you promised them you can do, then you are going to lose your customer base." Ken Lewis, chairman and CEO of Bank of America and a 1969 graduate of Robinson in finance, also expressed his views on what is needed to strengthen corporate governance and restore business reputations. "Corporate governance policies are of immediate concern to shareholders, who own our public companies and whose capital is at risk in the fortunes of these companies," Lewis explained. "Internal controls and external regulations are necessary and helpful in providing shareholders with a basic degree of confidence that the operations and financial results of a company are transparent and reliable, and I support many of the reforms that have been suggested recently. "That said, it is the personal integrity of those who manage and oversee our public companies that ensures adherence to high ethical standards and upon which public confidence in our economy is based. The market will hold these individuals accountable for corporate behavior." Top | Next Page See NYSE Guidelines, in brief.

Copyright © 2003 Robinson College of Business/Georgia State University.