There have been a lot of corporate scandals and financial crises in the companies around the world, such as failures of Enron Corporation, Lehman Brothers, Parmalat, Worldcom, etc. All these scandals were a huge blow to the investor’s interests and a result of malpractices by the management and poor corporate governance. Another reason behind such losses to the investors amounting to trillions of dollars was the lack of investor’s education.
Governments worldwide have set up committees to look into the matter and prescribe the standards of practices to protect the interests of the investors.
In this chapter, we discuss what governance is, the role of management, and how it can create a conducive environment for both businesses and investors. This chapter also discusses the consideration of environmental and social factors in governance.