Backgrounder: Corporate Governance

Good corporate governance is simply a system by which a corporation is managed properly and efficiently. This benefits its shareholders and society as a whole. The rest is commentary about how to achieve this goal.

When a chief executive in the U.S. spends $15,000 of his shareholder’s money to buy an umbrella stand, and millions of corporate dollars go to support a CEO’s royal lifestyle, it is fair to question whose interests were being served by the directors who were supposed to be “watching the shop”. If this can happen time after time in the U.S. with its shareholders protection laws, oversight by the U.S. government’s Securities and Exchange Commission , and corporate activism, how much worse can corporate waste be in the nascent capital markets in developing and transition countries? Probably not much worse, but how can one recognize the issues so that good reporting can educate those in emerging markets to control and prevent similar abuses?

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