It concerns the well-being of whole economies and populations too, and is a partnership question par exellence. Most of us, when we hear corporate governance, tend to think of codes, like the well-known Cadbury Code, that have emerged over the past few years. These governance codes usually recommend that companies change their board structures and procedures to make the company more accountable to shareholders. Often they suggest increasing the number of independent directors on boards, separating the position of chairman and chief executive officer, introducing new board committees such as the audit committee and so on. If this were all that corporate governance was about, then one could legitimately ask, why the OECD, an intergovernmental organisation whose mandate is to advise on public policy matters, is interested in the topic at all.
Governance is more than just board processes and procedures.
It involves the full set of relationships between a company s management, its board, its shareholders and its other stakeholders, such as its employees and the community in which it is located. The quality of governance is directly linked to the policy framework. Governments play a central role in shaping the legal, institutional and regulatory framework within which governance systems are developed. If the framework conditions are not in order, the governance regime is unlikely to be either. The policy framework covers considerations such as the legal rights of shareholders and their ability to obtain redress in case their rights are violated.