Corporate Governance

• Author: Bert Spector
• Profession: Professor of Strategy at Northeastern University
• Pages: 77-86

Corporate Governance 77

CHAPTER 6

CORPORATE

GOVERNANCE

Perhaps no issue relating to the world of business has attracted more atten-

tion in recent years than that of corporate governance. Broadly speaki ng,

corporate governance refers to the framework employed by a corpora-

tion—as established in its charter through the articles of incorporation—to

ensure that the business is being run effectively and in a way that advances

the interests of the shareholders who have invested their capital. The board

of directors—the group that sits at the intersection of shareholders and

executives—shares the fiduciar y responsibility with top executives to act in

the best interests of the corporation. It must perform its duties in compli-

ance with prevailing laws and reg ulations.

Governance matters are rich in lega l implications. In-house and out-

side counsels play a vital, complex role in ensuring good governance and

adequate complia nce. Recent federal legislation recognizes and codifies the

relationship between legal counsel and compliance, thus increasing the sig-

nificance of understandin g the dynamics of governance. But governance

is about more than compliance; it is about the proper management of the

corporation’s affairs.