# Corporate governance

Corporate governance refers to the system by which corporations are directed and controlled. The governance structure specifies the distribution of rights and responsibilities among different participants in the corporation (such as the board of directors, managers, shareholders, creditors, auditors, regulators, and other stakeholders) and specifies the rules and procedures for making decisions in corporate affairs.

## Quotes

* While it is legitimacy that gives a board the authority to impose its will on management, it is credibility that makes a board effective and value creating.
** Yvan Allaire, Executive chair Institute for governance in “The Independence of Board Members: a Quest for Legitimacy", Position paper, 2008.
* Like all fads, corporate governance has its zealots.
** Conrad Black in: Olive, David ed. "The world according to Conrad Black" Toronto Star, March 11, 2007
* Corporate governance is concerned with holding the balance between economic and social goals and between individual and communal goals. The governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. The aim is to align as nearly as possible the interests of individuals, corporations and society.
** Dominic Cadbury UK, Commission Report: Corporate Governance (1992)
* We have to change the mindset of our corporate leaders and, obviously, we have to raise the level of corporate governance.
** N. R. Narayana Murthy in: Xact Ad 'n' Art Studio (Delhi, India) (2003). Entrepreneur of the New Millenium: N.R. Narayana Murthy : Life & Times of N.R. Narayana Murthy. Pentagon Paperbacks. ISBN 978-81-86830-74-1. , p. 16
* Freeman is the acknowledged father of the stakeholder approach. His Strategic Management: a Stakeholder Approach (1984) introduced the concept of stakeholders, all of those individuals or groups other than shareholders (or owners) who have a stake in the particular decision or action of companies. The book proved to be a landmark in the development of stakeholder theory, a theory of management and business ethics that emphasises morality and ethicality in managing organisations. This theory was a departure from the dominant Anglo-Saxon approach that grants priority to shareholders and independence of management. Nowadays, the stakeholder approach is mentioned in virtually every publication on corporate governance and corporate social responsibility. By interacting with their stakeholders and societal context, organisations are able to establish their (social) responsibility system, enforced in part through laws and regulations but also increasingly voluntarily through company codes and business principles. The stakeholder theory is applied within various scientific disciplines ranging from business to law, from politics to health.
** Honorary Doctorate for Professor R. Edward Freeman at ru.nl, 19 February 2013
* Berle and Means’ book remains the point of departure and the central reference for reflection about corporate governance. It has given rise to differing, even contradictory interpretations, which explains how it could be used in support of opposing theories, notably on the question of the relationship between shareholders and managers. Thus, it has been used to argue in favor of the shareholder conception that is now dominant, even though it contains, as we shall see, a conception of the corporation that is radically different to the contractualist view that underpins the current doctrine of shareholder primacy.
** Olivier Weinstein (2012). "Firm, property and governance: From Berle and means to the agency theory, and beyond]." Accounting, Economics, and Law, Vol. 2 [2012], Iss. 2.

## External links

* Institute for governance of private and public organizations