A Primer on Corporate Governance

This book is a primer on corporate governance--the system that defines the distribution of rights and responsibilities among different participants in the corporation, such as the board, managers, shareholders, and other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs. Corporate governance also deals with how a company's objectives are set and the means of attaining those objectives and monitoring performance. The importance of this subject can hardly be overstated. As recent corporate scandals have shown and the current financial crisis reminds us, the efficacy of corporate decision making and our regulatory systems directly affect our well-being. Sound corporate governance not only pays by producing value for all stakeholders of the firm but also, even more importantly, it is the right thing to do--for investors, other stakeholders, and society at large. In other words, sound corporate governance is also a moral imperative.