What is good corporate governance? Although there is no commonly accepted definition, the one that comes closest belongs to management experts [Andrei] Sheifer and [Robert] Vishny. They explain that “corporate governance has to do with the means through which those who provide financial funding guarantee adequate return to their investors.” The term ‘good’ adds another connotation. It indicates that, in addition to guaranteeing adequate rewards, one must do so in a diligent way. That is to say, one must not only need to respect current legislation but also various ethical and moral principles.
Nevertheless, daily practice has shown that this is not always the case. One merely have to remember the financial scandal of Enron, the energy trading company, which once again is generating news in a trial of two former executives now taking place in the United States. In Europe, there have been other cases, such as the Ahold supermarket chain, which manipulated the accounts of Disco, its Argentine subsidiaries, and a case involving US Foodservice. There have also been the secret accounts that Banco Bilbao Vizcaya operated in tax havens. To avoid these types of fraud, and recover lost confidence in the markets of publicly traded companies, good governance codes have emerged. These codes bring together recommendations and principles of action that are not obligatory. Until now, Britain’s Combined Code was considered the most representative such code because of the important historical role the United Kingdom has played in this area. Other important reference points are the rules of the New York Stock Exchange, which is the only stock market where non-compliance is punishable by the law.
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