What is corporate governance?

OECD Observer

According to Mary Keegan, head of the Global Corporate Reporting Group at PriceWaterhouseCoopers, the New Economy is not only electronic commerce but a new style of governance.

"But what is really meant by corporate governance?" Maria Cattaui asked. Stilpon Nestor, Head of the Corporate Affairs Division at the OECD, gave a two-fold answer: behaviour of economic actors and a legal and regulatory framework in the context of the increasingly rapid growth of the private sector and of the flow of private investments, evaluated at more than $2000 billion in 1998 compared to $384 billion at the start of the 1980s. The OECD standards and guidelines in the field of corporate governance are both a framework and a source for policy direction.

Mary Keegan feels that, due to the existence of 200 different national legislative systems, work must be undertaken to improve accounting standards in the world, using the OECD guiding principles.

Robert White, President Emeritus of the Canadian Labor Congress, and strongly involved in the trade union movement, considers that corporate governance should protect workers’ rights in the same way as those of shareholders. Another panel member, Omkar Goswami, Chief Economist at the Confederation of Indian Industry, considers that good governance is not a question of altruism but rather provides a propitious environment for the company so that it can thrive and grow in a competitive way. Many companies find it necessary to comply with standards in order to have access to international capital market resources.

Clyde Prestowitz, President of the Economic Strategy Institute, notes increasing tension between the parties involved (employees) and the shareholders. The former could join the latter by receiving stock options, following the example of Silicon Valley: the parties involved thus become entitled to manage companies that are more frequently being judged on their ethical values.

In the opinion of Djisman Simandjuntak, Executive Director of Prasetiya Mulya Graduate School of Management in Indonesia, corporate governance can only be gradual in Southeast Asia, a zone that is profoundly marked by pragmatism and not attuned to laws and principles. Djisman Simandjuntak stressed that it is more important for his country to restore macro-economic credibility. The forecasts of economic growth predict 4%, but, he insists, “the more quickly foreign capital returns, the quicker it will help us adopt principles of good governance”.

Final evening session, 26 June 2000, Goethe

Moderator: Marie Cattaui, Secretary General of the International Chamber of Commerce

©OECD Observer June 2000 

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