The report stems from the mandate of the high-level business group, set up by the OECD in 1996 to review and analyse international corporate governance issues and to suggest priorities for the work of the OECD in this area. In an era of increasingly integrated financial markets, global competition and technological progress, corporate governance matters to firms because it helps to determine their capacities to attract the financial and human resources needed for investment, entrepreneurship and competitiveness. It matters for investors, who are looking more to effective management decision-making as a means to improve company performance. It matters to governments, because the performance of the enterprise sector is a key determinant of progress in income and welfare in OECD and non-member economies alike.
Corporate governance is primarily the responsibility of the private sector.
But governments and regulators also have a distinct responsibility in creating the legal and regulatory environment in which efficient, credible and adaptable corporate governance practices can flourish. In addition, it is more and more accepted that the corporate objective of maximising shareholder value requires not only superior competitive performance, but also responsiveness to the demands and expectations of employees, local constituencies, and other stakeholders. From this perspective, the report specifies the appropriate roles of policy-makers and the private sector respectively and emphasises that enhancement of good corporate governance must be a joint effort. In recognition of the importance of good corporate governance, efforts have been made in a number of countries to improve its quality. The Advisory Group considers the OECD to be the ideal forum to serve this process.