Business Ethics and Corporate Governance, Second Edition

NARROW VERSUS BROAD PERCEPTIONS OF CORPORATE GOVERNANCE

Corporate governance can also be defined from a very narrow perception to a broad manner. According to an article that appeared in Financial Times in 1997: ‘Corporate governance… is defined narrowly as the relationship of a company to its shareholders or, more broadly, as its relationship to society.’

The earliest definition of corporate governance in its narrow sense is from the Economist and Nobel Laureate, Milton Friedman. According to him, ‘corporate governance is to conduct the business in accordance with the owner’s or shareholders’ desires, which generally will be to make as much money as possible, while conforming to the basic rules of the society embodied in law and local customs’. ...