solomon and solomon - 2004 - corporate governance and accountability, (2004) wiley, 303 pages, isbn 0-470-84365

Book Reviews
Corporate Governance and Accountability
Jill Solomon and Aris Solomon, Wiley, 2004. 303 pages, ISBN 0-470-84365-9, £24.95
Corporate governance is one of the most rapidly expanding topics in university
education. Corporate failures such as the high profile Enron case of 2001 have heightened
public and academic awareness of the subject. However, until recently there has been a
relative dearth of textbooks in the area. Corporate Governance and Accountability by Jill
Solomon and Aris Solomon is one of a number of texts which have been released in recent
times to fill this new demand.
Corporate Governance is a broad topic which intersects with a number of different business
and management subject areas. Using an international context but with particular attention on
the UK, Corporate Governance and Accountability seeks to provide a summary of the theory
and practice of corporate governance. The book provides both a review of the historical
development of corporate governance and a broad examination of corporate governance in the
UK since the introduction of the Cadbury report (1992). Using a descriptive style, Solomon
and Solomon draw on a wide range of academic research, including some of their own, to
inform their discussions and support their interpretation of the world of corporate governance.
In Part I the book takes a broad view of corporate governance issues beginning with the
theoretical frameworks (agency costs, transaction costs and stakeholder theory) and going
on to examine the Enron case and the UK corporate governance reforms of the 1990s in
more detail. Particular attention is then paid to the roles of boards of directors, institutional
investors and transparency. Charkham (1994) identified two key aspects of corporate
governance which should be examined when judging a corporate governance system—
dynamism and accountability. As the title suggests, the focus of the this text tends to be on
accountability rather than on managerial dynamism.
The second part of the book introduces readers to corporate governance in a global
context and discusses moves towards harmonisation of governance systems. The main body
of this section is a limited reference dictionary of corporate governance systems. Evidence
from academic research and policy documents is used to briefly outline the characteristics of
the corporate governance systems of 27 different countries around the world. It is nothing
more than a briefing but it is interesting in its own right and successfully illustrates the

diverse range of corporate governance systems world-wide.
In Part III, the authors allow themselves some freedom to pursue discussion of
corporate social responsibility. Chapter 9 provides a review of the relationship between
The British Accounting Review 36 (2004) 459–464
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corporate social responsibility, financial performance and accountability. Finally, Chapter
10 takes the reader further into the world of socially responsible investment with particular
attention paid to the role of institutional investors.
As already stated some issues are almost conspicuous by their absence. There are two main
systems of corporate governance—market-based and bank-based. There is little consideration
here of the role of financial markets in corporate governance. Most texts explicitly recognise that
the UK is a market-based system and that financial markets play a key role in corporate
governance. Here we find a strong focus on internal governance. There is some discussion of
institutionalandshareholderactivismalthoughitismostlylimitedtotheirrole inthe accountability
of companies. Perhaps most conspicuous though is lack of consideration of the role of banks.
In summary, Part I is a very useful review of the current state of corporate governance.
Part II provides an interesting look at global corporate governance systems and Part III
provides the reader with some insight into corporate social responsibility. The overall
focus is biased strongly towards the role of corporate governance systems in providing
accountability whilst neglecting the important role it plays in allowing managerial
dynamism (Charkham, 1994). Corporate governance systems must provide a balance
between these two characteristics—such a balance is not presented here.
Corporate Governance and Accountability is well written and includes a selection of
useful illustrations to support the discussion. The authors also use the results of a
questionnaire survey of institutional investors to illustrate some aspects of the presented
material. The text is well referenced with relevant conclusions of numerous research
papers and policy documents. As such Corporate Governance and Accountability serves
as a useful reference text for conducting a literature review on accountability.
For module leaders, this text may provide a useful resource for coverage of
accountability or corporate social responsibility. It may also be useful as a reference text

for academics wishing to present a class or two on the diversity of corporate governance
systems around the world. However, it lacks depth in most areas covered. The strengths are
the coverage of the roles of boards of directors, institutional shareholders and transparency.
Particularly original is the role of disclosure in terms of transparency and in terms of socially
responsible investment. It is, however, a limited text and would be more appropriate in the
early phases of an undergraduate degree programme in management or accounting.
Reference
Charkham, J., 1994. Keeping Good Company—A Study of Corporate Governance in Five Countries. Oxford
University Press.
Edward A.E. Jones
School of Management and Languages, Heriot-Watt University,
Riccarton, EH144AS Edinburgh, Scotland, UK
E-mail address:
doi:10.1016/j.bar.2004.07.002
Book reviews / The British Accounting Review 36 (2004) 459–464460