The Corporate Governance Debate

Corporate governance is concerned with the regulation, supervision or performance and
conduct oversight of the corporation. The orthodox view is that the aim of
corporate governance is to ensure that suppliers of capital (stockholders) get
a return on their investment by increasing the profits of the business. The
modern view of corporate governance is beyond the realm of law. It cannot be
regulated by legislation alone. Legislation can only lay down a common
framework – the “form” to ensure standards. The “substance” will ultimately
determine the credibility and integrity of the process. Substance is inexorably
linked to the mindset and ethical standards of management. Hence, companies
should add value to as many organizational stakeholders as is practicable. This
reflects a movement that requires firms to take a more responsible and ethical
role in their societal context focused upon the notion of “corporate
citizenship”. The focus here is on stakeholders. The debate between the
continuums of stockholder versus stakeholders has taken a centre stage and is a
matter of debate both as well as global level.