Islamic Finance For Dummies

Chapter 15

Considering Corporate Governance

In This Chapter

Defining corporate governance

Noting why governance is especially crucial in the finance industry

Identifying the stakeholders in an Islamic finance venture

Distinguishing Islamic from conventional corporate governance

Putting governance concepts into action

Corporate governance has been a topic of (sometimes heated) public discussion in recent years, starting in 2001 and 2002 with the collapses of Enron and WorldCom. The widespread impact of corporate fraud has the power to rile up virtually everyone, but especially the shareholders in these corporations — who lost a bundle. (For example, the approximately 20,000 Enron employees who held mostly company stock in their retirement plans lost about $1.1 billion when the company declared bankruptcy; its stock price fell from a high of about $90 to less than $1 per share.)

The concept of corporate governance has existed for a long time in the financial world, but it gained a new ...