Strengthening the Governance Process I: Micro Reforms

Abstract

The significant failures of the governance process flowing through the global corporate system over the past few years indicate that reforms are needed in order to strengthen the business environment. Ultimately, good governance is essential to good corporate operations, and good corporate operations help build a strong business environment. Many academic studies have been carried out over the past two decades to determine whether particular elements of corporate structure, control, and behavior can lead to better governance. The results, as is often the case with empirical analyses, are mixed: some suggest greater independence of directors adds value, while others find no strong linkage; some indicate that separating the roles of chairperson and CEO roles is important, others do not; some note that the establishment of board committees directly benefits shareholders, others find no such evidence.