Reforms to Corporate Governance

Abstract

Macroeconomic and industrial policies are not the only — and maybe not even the most important — ingredients for economic success. Company boards set decisions that can unleash or constrain growth and when these individual decisions are closely correlated they may even be decisive for the macroeconomic growth rate. Company boards, in turn, are conditioned and constrained by custom and law and in particular by the duties of directors. Whether the duties of directors are defined narrowly as primarily to shareholders, or are more pluralist, extending to other stakeholders, is one of the great issues of corporate governance.¹