Corporate Governance

Abstract

Company scandals have recently placed the corporate governance theme strongly within the area of general interest. This chapter will sketch the underlying roots of the ultimate emergence of the corporate governance issue, also from a historic perspective. Important suggestions for corporate governance reform will be highlighted and commented upon. It will be argued that the suggested reforms are partly meaningful, and partly problematic: bureaucracy, high costs, questionable value, or even risky from a business point of view. Paradoxically enough, the financial/economic focus of corporate governance makes this approach unsuitable for addressing the intended interests of shareholders effectively. For that, the necessary wider perspective of enterprise governance will be argued. In view of this, the adequacy of the well-known COSO framework for corporate governance will be analyzed. Finally, we will discuss how corporate governance requirements (compliance) can be addressed effectively. This will illustrate that effectuating corporate governance must occur in the context of overall enterprise governance and enterprise design.