A self-correcting course for governance

Originally, the model of governance was simple. Over time, growth, expansion, and the need for outside capital led to dispersed shareholder ownership in companies, and boards and managers became strangers to the shareholders as well as each other. Recognizing the agency principle, the interests of s...

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Bibliographic Details
Published in:Directors & boards 2003-03, Vol.27 (3), p.26
Main Author: Millstein, Ira M
Format: Article
Language:English
Subjects:
Boards of directors
Changes
Corporate governance
Leadership
Stockholders
Online Access:Get full text
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Summary:Originally, the model of governance was simple. Over time, growth, expansion, and the need for outside capital led to dispersed shareholder ownership in companies, and boards and managers became strangers to the shareholders as well as each other. Recognizing the agency principle, the interests of shareholders and managers often diverged - and boards were caught in the middle. The flurry of legislative and regulatory action that followed the recent governance scandals have greatly reinforced checks and balances. Moreover, courts in Delaware and elsewhere have indicated that these reforms may raise the standard of conduct to which directors are held. All of this means that, now as never before, boards must figure out how to get the information necessary to carry out the new burdens that the reforms and the public's expectations have placed on them.
ISSN:0364-9156