Corporate Governance

What is corporate governance and how does it affect multinational board members?

Corporate governance broadly refers to mechanisms, processes and relations by which corporations are controlled and directed.

Three documents released since 1990: The Cadbury Report (UK, 1992), the Principles of Corporate Governance (OECD, 1999, 2004 and 2015), the Sarbanes-Oxley Act of 2002 (US, 2002) (SOX) define how companies are controlled and directed.

Ad hoc decision making in challenging business environments is a dangerous game if you don’t play it by the rules of corporate governance.

Today, Society is defining that boards are explicitly accountable for the behavior of it’s employees and the enterprise culture. Lead by example includes simple principles as “don’t lie, don’t steal and don’t cheat”.

Strong recommendations to boards are to put the long term view on enterprise value creation as priority and adapt the business model accordingly. Such governance rules should allow boards to resist to short term views by a specific group of shareholders

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