3. Introduction
Corporate Governance has become a subject in its own right over the past decade but Corporate Governance issues are as not new- there have been tensions from the beginning as the case of Salomon v Salomon [1897] illustrates. Despite the longevity the phrase ` corporate governance ` is somewhat `MALLEABLE`- i.e almost every author or book on the subject offers a different view of what the phrase means. In the broadest sense, it means the question of who should own and control the company and in its narrowest; it purely means the relationship between the shareholders and Directors.
The importance o Corporate Governance (CG) can best be understood in the context of how large modern companies operate. Owing to the separation of ownership and management, there is a need to establish appropriate control monitoring procedures to ensure that management can effectively utilise entrusted resources to add values to business owners. The owners ( the investors/ shareholders) will not usually be involved in the planning and control of the business of the companies and there is a risk than the managers( Directors) may pursue their own interests even at the expense of the shareholders. In other words – conflicts of interest can arise. Moreover, there are a number of different interested parties/ stakeholders- e.g between controlling large shareholders and minority shareholders, creditors and shareholders, shareholders and employees. Thus CG can be defined as “a set of mechanisms, both industrial and market- based, that induce the self- interested controllers of the company to make decisions that maximise the value of the company to its owners (Denis and McConnel, 2003)’’
4. Hot Topic
Previously highly regarded names like Worldcom, Qwest, Enron, and Equitable Life are now synonymous with grave miscarriages of corporate stewardship. This saga has been