"How does corporate governance even matter?" The bottom line..

Suppose the CFO or CEO of a company asks you the above question. Forget value judgements and moral righteousness.

How would you convince the CFO/CEO that good corporate governance is worth the cost?

The carrots:

1. Corporate governance affects bond ratings
Bhojraj and Sengupta as well as Ashbaugh, Collins and LaFond have made arguments to that effect.

2. And therefore affects cost of capital
See above; as well as Gompers Ishii and Metrick's paper entitled Corporate Governance and the Cost of Equity Capital.

See full Article.