Ethical considerations aside, U.S. companies damage their long-term business interests when they turn a blind eye to the "dirty money" that flows through their coffers. Policy strategist Raymond Baker explains why.

There was a time when CEOs weren't celebrities, but that was before Jack Welch. Over the past 20 years, Welch, more than any other business leader, has changed the way people view the role of the CEO. There was no General Electric separate from Welch and no Welch separate from General Electric. Through his bold and sweeping reinvention of the company--thanks in no small part to the force of his personality--Welch created the CEO not just as public figure but as icon. Indeed, Welch's legacy and life have been analyzed, lauded, and excoriated by the public and the media alike. Small wonder, then, that his recent book--Jack: Straight from the Gut--has garnered the same degree of publicity. In this frank and wide-ranging interview with HBR senior editors Harris Collingwood and Diane Coutu, Welch replies to his critics and offers a detailed look at his theory and practice of business. Candidly answering questions about his personal style and his upbringing, Welch also gives readers a detailed glimpse of the practices that shape the distinctive GE culture: the meetings, the "deep dives" and, most important, the transmission of powerful ideas throughout GE's far-flung organization.

Historian Thomas Frank spends a lot more time than you do reading management books. Most of them, he concludes, are more concerned with convincing people that corporations have souls than with improving the practice of management.

Quarterly earnings numbers dominate the decisions of executives, analysts, investors, and auditors. Yet for all the attention paid to these numbers, they're not much use in predicting a company's future performance and cash flows. Even economists are unanimous in their view that these numbers say next to nothing about a company's prospects beyond the next quarter. Nonetheless, meeting analysts' expectations that earnings will rise in a smooth, steady, unbroken line has become, at many corporations, a game whose imperatives override even the imperative to deliver the highest possible return to shareholders. The fetishistic attention paid to this almost meaningless indicator might be cause for amusement, except for one thing: the earnings game does real harm. It distorts corporate decision making. It reduces securities analysis and investing to a guessing contest. It compromises the integrity of corporate audits. Ultimately, it undermines the capital markets. In this article, HBR senior editor Harris Collingwood takes an in-depth look at these effects, examining the intricacies of the earnings game and why companies believe they have no choice but to play it. Until more corporate executives change their practices, he explains, the earnings game will never lack for players.