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Corporate Governance

March 11, 2014

Corporate governance has been a buzzword in the financial media lately. Carl Icahn, the billionaire activist investor, has been pushing very strongly to break up eBay into a “traditional” eBay business, and spinning off PayPal into its own separate entity. Obviously, Carl Icahn is a specialist in the matter of investing and agitating for change in corporate structures, but the primary message he is currently hammering the management team with is a topic that is gathering more and more importance. The Vatican is also undergoing a massive internal shake-up with the intention of improving corporate governance.

What is corporate governance?

Corporate governance, in a nutshell, is how an entity runs the business that it is in – corporate strategy, talent management programs, and corporate ethics program all fall under the umbrella known as corporate governance. In addition to these programs and initiatives, two of the most critical roles of corporate governance, and of those tasked with implementing it, are ensuring compliance with regulatory and legal frameworks and ensuring that the management team operates with their ethical and business mandate.

So what’s the big deal? The big deal is what happens when corporate governance goes bad.

Some stories that resulted, at least in part, from poor corporate governance:

LIBOR rate fixing
Enron
WorldCom
Tyco
JP Morgan’s “London Whale” debacle

Some allege that the entire financial crisis was due to flaws in corporate governance

Corporate governance – more important than you might have thought.

Happy Reading!

http://www.businessweek.com/articles/2014-02-26/pope-francis-shakes-up-the-vaticans-corporate-governance

http://www.reuters.com/article/2014/03/05/us-icahn-ebay-idUSBREA241DK20140305

http://www.livemint.com/Money/38pMz96Ei9atgB4J21rGeM/If-theyre-multinationals-why-bother-about-corporate-govern.html

http://articles.economictimes.indiatimes.com/2009-01-18/news/28462497_1_corporate-governance-satyam-books-fraud-by-satyam-founder

http://www.efinancialnews.com/story/2014-03-10/corporate-governance-climbs-ipo-agenda?ea9c8a2de0ee111045601ab04d673622

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