findings and theoretical issues. The proposals developed are not beyond controversy and, therefore, should stimulate further discussions. Brigitte Eierle University of Reg ensburg, Germany Corporate governance and accountability, Jill Solomon, 2nd ed John Wiley & Sons, Chichester, UK(2007), xvi + 386 pages, £ 30.99, €48.11, $65.00, ISBN 0-470-03451-3 1. Introduction The dynamic concept of corporate governance and its underlying themes and issues continue to challenge practitioners and academics alike with its constant review and reforms, at a national and international level. As the author points out the term corporate governance is one of the most commonly used phrases in the current global business vocabulary. The author presents a text which is well written, easily understood and extremely informative. First published in 2003, this second edition of the book updates the first and includes new featu res. The author's and colleagues' latest research is also summarized and referred to within the text. The book will be useful to u ndergraduate and masters students, as well as practitioners interested in critically thinking about their role within a corporate-governance framework. It includes the key literature pertaining to corporate governance, which is extremely useful for those undertaking research. 2. Overview The book is divided into three parts, with 11 chapters. It provides an overview of corporate governance. In Part I the author sets out the corporate-governance framework and mechanisms with a clear U.K. focus before providing a summary of global corporate-governance systems in Part II. The book concludes in Part III with an extremely interesting examination of the ways that corporate governance has evolved to include stakeholder concerns as well as shareholder accountability. The book, which is supported by the author's and colleagues' research, includes an Enron case study and an analysis of Parmalat, the “European Enron”.Particular features of the book are the chapter summaries and questions for reflection and discussion, which are extremely useful, not only for those studying corporate governance but also for those delivering corporate-governance units at undergraduate and postgraduate level. The author defines corporate governance as “the system of checks and balances, both internal and external to companies, which ensures that companies discharge their ac- countability to all their stakeholders and act in a socially responsible way in all areas of their business activity” (p. 14). The main premise of the book is based upon the perceived shift from the shareholder-based model of corporate governance, with attention being principally focused on making companies more accountable to shareholders, to an increasing emphasis on meeting the needs of a broad range of stakeholders. The author argues that theoretical frameworks that doi:10.1016/j.intacc.2007.09.002 447Book reviews suggest companies should only be accountable to shareholders are not necessarily inconsistent with theoretical frameworks, which favor stakeholder accountability. The author also observes that this wider stakeholder approach, linked to social responsibility and to some extent an ethical approach to business, is not necessarily inconsistent with corporate profitability. This belief is, as the author states, founded “on a growing body of literature and empirical evidence that suggests that corporate accountability, which takes into account a broad range of social, ethical and environmental factors, is conducive to financial performance” (p. 29). 3. Part 1 Part I, which consists of chapters 1–6 deals with corpor ate-governance frameworks and mechanisms. Chapter 1 first defines corporate governance before dealing with the theoretical frameworks of agency, transaction cost, and stakeholders. The author compares and contrasts these before noting that they are “different lenses through which the same problems may be observed and analys ed” (p. 23). Chapter 2 deals with corporate- governance failure with particular reference to “Enron” and “ Parmalat”. The main focus is the “Enron” case study which illustrates the dangers associated with weak corporate governance and ineffective checks and balances. The author observes that while the U.S. and Italian corporate-governance systems are very different, it is interesting to note that they are equally vulnerable to similar forms of abuse and corporate-governance weaknesses. Chapter 3 focuses on U.K. corporate-governance reform, which the author states has, since the first edition of the book, been subject to over-all fine tuning and refining of corporate-governance mechanisms rather than dramatic changes and reforms. The chapter provides a useful historic overview and summary of the corporate-governance reports from the Cadbury Report (1992) to present day. The chapter introduces the corporate-governance codes of practice and policy documents and explains the U.K. self-regulatory/voluntary approach to corporate governance, described as the “comply or explain” approach, aimed at encouraging compliance with its associated “good” corporate-governance culture rather than strict statutory code. This approach has not been adopted at a global level and many countries have adopted a more legalistic and statutory approach. It also highlights the impo rtant link between governance and financial performance, before concluding with the development of corporate-governance ratings, which impact on shareholder wealth. Chapter 4 deals in some detail with the role of the board of directors, focusing mainly on U.K. listed companies. The chapter covers the main initiatives supported by academic literature from board structure to the increasingly important role of the non-executive director. The board is compared to a “healthy heart” that ne eds to be “healthy, fit and carefully nurtured for the company to run effectively” (p. 77). The author outlines the corporate-community response to the Higgs Report (2003) and considers the arguments put forward by the literature relating to whether non-executive directors play a useful corporate-governance role. The chapter highlights the initiatives to widen the non-executive “gene pool” recommended by Higgs (2003) and Tyson (2003). It closes with a view that the board is subject to a complexity of dynamics which leads to perhaps a need to consider not only an “agency theory, finance paradigm” but also other disciplines, such as “management science” when seeking “understanding of board as corporate governance mechanisms” (p. 104). Chapter 5 considers the role of the institutional investor, highlighting the monitoring aspect in the context of agency theory. The 448 Book reviews chapter explains how the ownership structure has become more concentrated in the hands of a small group of large institutional investors and the related, complex web of ownership, as exemplified by pension fund investment management. The chapter also deals with the increasing acti vity of the institutional investor, with special reference to research into institutional investor voting in the U.K. and the impact of shareholder activism on corporate performance and company value. Chapter 6 is dedicated to the way in which corporate transparency contributes to corporate governance and the associated mechanisms by which companies may become more transparent. A particular feature of this chapter is the section dealing with the emerging areas of governance reporting and forward-looking narrative reporting. Other key aspects of the chapter include the importance of risk disclosure and the role of the audit in corporate governance linked to the agency problem. 4. Part II Part II of the book focuses on the theme of global corporate governance. Chapter 7 introduces corporate-governance systems worldwide, based upon the main determinates of ownership structure and legal frameworks while recognizing the impact of cultural and other influences. The author acknowledges the difficulty associated with the categorization of a country's corporate-governance system but adopts the accepted “insider” and “outsider” model (p. 182), while offering the view that there is a real possibility that corporate governance will converge at a global level. Chapter 8 provides a reference dictionary of corporate-governance systems of selected countries that seeks to illustrate the broad diversity arising from their own legal frameworks, corporate ownership, structure, culture, and economic factors. This chapter clearly meets its aim of providing a flavor of the rich diversity of corporate-governance systems internationally. However, it could benefit from elaboration or even form the basis in its own right of a comparative text on international corporate-governance systems. 5. Part III Part III broadens the debate on corporate governance by “extending the theoretical paradigm from a narrow agency theory perspective to encompass a stakeholder theory perspective” (p. 231). The author does this very successfully in chapter 9 by considering the growth of corporate social responsibility and highlighting the potentially strong impact of corporate behavior on a wide range of stakeholders. This is supported by a discussion of the social, ethical, environmental, and sustainability disclosure which has the potential of discharging their accountability to a wide range of stakeholders. The author notes the importance of environmental and sustainability corporate reporting in achieving wider accountability to both shareholders and corporate stakeholders. This is supported by a growing perception that “good management of socia l and environmental issues is a reflection of good general management, which is helping to drive the sustainability agenda” (pp. 263–264). The chapter concludes by considering the academic debate that exists over the stakeholder engagement and its genuine success in promoting corporate accountability. Chapter 10 develops the theme of a broadening corporate-governance agenda through its analysis of the role of institutional investors in driving corporate social responsibility by taking account of environmental, social, and governance factors in their investment 449Book reviews decisions. This analysis extends to consideration of socially-responsible investment strategies and investments and their drivers and profitability. The author reports upon the increasingly sophisticated engagement and dialogue that is emerging between institutional investors and their investee companies in the area of social and environmental information as part of socially-responsible investment. The author offers the view that such issues are now being integrated into the heart of corporate-governance concerns for the institutional- investment community. The chapter concludes with the statement that “this represents a deep change in the attitude of business and financial institutions towards social responsibility, endorsing a broader remit than that encapsulated by pure agency theory” and that a “broader agenda for corporate governance, which embraces a stakeholder theory approach, may no longer be viewed as inconsistent with value creation in the long run” (p. 302). Part III concludes with chapter 11 which provides a brief insight into the author's view of the future direction of corpor ate governance and accountability, which touches upon investor activism, the global convergence in corporate governance, and corporate-governance refor m. In conclusion, it is fair to say that the author achieves the stated aims of this work in an informative and easily-read format. The book not only provides a great deal of explanation and detail on the topic of corporate governance and accountability for undergraduates and practitioners alike, but also provides a very useful discourse on a range of associated theories, with reference to key literature on corporate governa nce and accountability, for postgraduates embarking on their research. References Cadbury, A. (1992). Report of the committee on the financial aspects of corporate governance (Cadbury report). Higgs (2003). Review of the role and effectiveness of non-executive directors (Higgs report). London: Department of Trade and Industry. Tyson (2003). Report on the recruitment and development of non-executive directors (Tyson report). London Business School. Jonathan Edwards Business School, Bournemouth University, United Kingdom doi:10.1016/j.intacc.2007.09.001 Financial statement analysis and security valuation, Stephen H. Penman, 3rd ed. McGraw-Hill/Irwin, International edition (2007), xxix + 776 pages, £44.99, ISBN- 10: 007-125432-3 Penman's book is a well crafted volume, which offers plenty of content including detailed material on “hands-on” financial statement analysis and valuation. It is com- prehensive and such, the 2nd edition was widely adopted. The book provides a helpful reference for students in economics and business, particularly for MBA candidates. Penman's book also serves the needs of professionals who are confronted with valuation 450 Book reviews . governance and accountability, Jill Solomon, 2nd ed John Wiley & Sons, Chichester, UK (2007) , xvi + 386 pages, £ 30.99, €48.11, $65.00, ISBN 0-4 7 0-0 345 1-3 1. Introduction The dynamic concept of corporate. analysis and security valuation, Stephen H. Penman, 3rd ed. McGraw-Hill/Irwin, International edition (2007) , xxix + 776 pages, £44.99, ISBN- 10: 00 7-1 2543 2-3 Penman's book is a well crafted volume,. studying corporate governance but also for those delivering corporate- governance units at undergraduate and postgraduate level. The author defines corporate governance as “the system of checks and