Corporate Governance Codes and Their Implementation

Abstract

Good governance - both by public institutions and by private business - is considered one of the building blocks upon which economic success is based. Hence the efforts undertaken by many international and national organisations and bodies to improve governance, especially by enacting rules, standards or recommendations, have to be respected and serve as models against which directors of these institutions or business firms can measure their conduct.

Corporate governance is a subject that is notoriously difficult to define in one sentence. Some view corporate governance in the narrow sense, dealing with the structure and functioning of the boards of directors, and their relationship to management. This narrow definition is the one often found in corporate governance codes. A broader definition includes a company's relationships with shareholders, especially in organisations with concentrated ownership. Finally, academic studies dealing with governance broaden the definition to all internal relationships within a business, including the issues raised by the conduct of shareholders, especially institutional investors, the functioning of the general meeting and the company's relationship with the financial markets. As this article relates to the implementation of corporate governance codes and not to their substance, the narrow definition will be followed.

Keywords: corporate governance

JEL Classification: K20, K21