Questions -

1) Why do state courts generally defer to management's business judgment? What might be some dangers of imposing liability for breach of fiduciary duty more frequently?

2) If the SEC recognizes IFRS for U.S. issuers, the IASB, a foreign nongovernmental organization, would have authority over U.S. accounting standards. Is such an arrangement consistent with SOX's requirement for a government-funded accounting standards setter? (See Sarbanes-Oxley § 109.) Does ceding power over U.S. accounting standards to a foreign body create accountability problems? How might such issues be resolved?

3) Numerous studies cited in the chapter support the view that incentive compensation contributes to financial fraud. Assuming this connection is well founded, how should compensation practices at public corporations be reformed? The topics reviewed in the chapter suggest that each of the accountability mechanisms relied on for corporate governance is flawed in some way.

4) What appear to be the most pressing problems in corporate governance? What are possible reforms to increase the accountability of corporate managers?