Publication: A Corporate Governance Model : Building Responsible Boards and Sustainable Businesses
Date
2010-01
ISSN
Published
2010-01
Author(s)
World Bank
Abstract
The foundation of good corporate
governance is the intellectual honesty of directors and
senior management. This intellectual honesty is expressed by
acting in the best interests of the incapacitated company.
The company, on formation, is a person, but it is absolutely
incapacitated until its directors are appointed and the
board in turn delegates to management the implementation of
its collective decisions. It is the quality of governance
that is important and not the quantity. Mindless compliance
with a set of rules is not good governance. Good governance
connotes acting with responsibility, accountability,
fairness and transparency. Transparency has a withering
effect on misconduct and is absolutely critical in
communicating to stakeholders any decisions of the board. In
this context, transparency demands that the communications
consist of substance over form and contain positive and
negative aspects, if any. The board of directors is the most
important element in corporate structures. Issues such as
the composition of the board of directors, the issues that
the board focuses on, processes they follow for decision
making and how they learn to continuously improve the
governance of the corporation critically influence the
quality of decisions and the management quality. The main
responsibilities of the board are to provide an effective
oversight for the management and guidance to the corporation
with value creating strategies. The quality of their
decisions is critically dependent on the quality of the
information they have. Establishing a culture that sets the
right tone at the top is critical for establishing the
'trust' for the corporation.
Citation
“World Bank. 2010. A Corporate Governance Model : Building Responsible Boards and Sustainable Businesses. Private Sector Opinion; No. 17. © Washington, DC. http://openknowledge.worldbank.org/entities/publication/83b1c40d-20f9-597e-8f67-74ee8ee97aae License: CC BY-NC-ND 3.0 IGO.”