Looking Toward the Future: The Business Case for Corporate Governance
Historically, in the developed economies, key drivers for the adoption of good corporate governance have been the following: the search for investment capital, the desire to list on major global stock exchanges, the need to gain access to technology, and the desire to build solid supply chains. In today’s global economy, corporate governance is becoming increasingly recognized as a key factor affecting businesses’ success in emerging markets as well.
Opportunities and competitive threats created by the global economy make instituting good corporate governance practices key to developing a strategy for the company to prosper. Improving corporate governance allows companies to attract greater investment at lower cost, strengthens corporate strategy and its implementation, clarifies accountability, enhances shareholder protection, and helps to attract and retain quality employees. This is true not only for large publicly-listed multinationals but for other types of companies as well. For controlling shareholders, corporate governance clarifies roles and improves accountability, enhances senior executives’ professionalization, and increases company value. Crucially, for society as a whole, corporate governance minimizes the occurrence of corruption, reduces the risk of devastating systemic crises, and improves productivity.
Article at a glance:
- In today’s global economy, corporate governance is becoming increasingly recognized as a key factor affecting businesses’ success in emerging markets.
- In order to strengthen private sector governance, countries and companies should also focus on broader reforms of the judicial systems, property rights, freedom of information, and other institutions key to market economies and democratic governance.
- An effective corporate governance framework supports a foundation for sustained growth and a stable and vibrant global economy in the future.
