Business Ethics and Corporate Governance, Second Edition

CONTEMPORARY CORPORATE GOVERNANCE SITUATION

In the original concept of the company, the basis of corporate governance was shareholder democracy. Shareholders were relatively few and close enough to the board of directors to exercise a degree of control. Indeed in millions of smaller, tightly owned companies around the world that is still the situation today.

But for major corporations, particularly those which have their shares listed on a stock exchange, the governance situation has practically changed. In many countries, the shares of public companies are now held by diverse shareholders—some by private individuals, some by institutional investors such as banks, pension funds and insurance companies, and some by other companies, who might have ...