Corporate Governance Case Study at Knight Transportation Inc.
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Code : GOV0024B
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Region : USA |
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Introduction: Knight Transportation, Inc. (KTI), a US based trucking company, started in 1989, had been rated by Forbes as ‘one of the best small companies’ in the US, consecutively for 10 years (1995- 2004), mainly for its ‘up operating quarters1.’ In October 2004, KTI was ranked 66th in the Forbes list of 200 best small companies in the US. KTI was also setting standards in corporate governance, by adopting written charters in compliance with the Sarbanes-Oxley Act for public companies (Annexure I). The charters were adopted in March 2005. In June 2005, the Institutional Shareholder Services (ISS) rated KTI’s Corporate Governance Quotient better than 15.6% of S&P 6002 companies and 37.2% of Transportation companies KTI’s common stocks were initially listed on The Nasdaq National Market (NASDAQ)3. As per the rules promulgated by the National Association of Securities Dealers, Inc. (the NASD), the company had started implementing the corporate governance guidelines. But the compliance cost (especially section 404 of Sarbanes-Oxley Act)4 for small public companies in Nasdaq was found to be disproportionate to its benefits. KTI opted to transfer6 its common stocks from NASDAQ to the New York Stock Exchange (NYSE), the world’s largest market worth US$ 20 trillion that secured the best prices 89% of the time in the listed stocks in 2004. The stocks were accepted for listing (under the symbol KNX) in December 20047 and the trading on these shares commenced by December 30, 2004. |
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