A Blueprint for Corporate Governance

CHAPTER 1

CORPORATE GOVERNANCE: AN OVERVIEW

INTRODUCTION

Corporate governance is about who controls corporations and why. In the United States, the legal ‘‘who’’ is the owners of the corporation’s common stock—the shareholders. However, the reality—even the legal reality—is much more complicated, and the ‘‘why’’ is to be found in historic American concerns about the connections between ownership, social responsibility, economic progress, and the role of markets in fostering a stable pluralistic democracy.

Initially, these concerns were focused on the role and responsibilities of the owners of business firms because the owners managed the firms themselves. However, with the emergence of large corporations, perhaps symbolized by the Standard ...