Investors and company directors need to exercise corporate governance

ethics

Investors need to ensure companies are properly directed and controlled and that their managements are also acting like owners, if they wish to protect their investments

Corporate governance is not another piece of opaque financial jargon, but rather one of the most important issues facing investors today. Few people will have missed the long-running saga surrounding the issue of executive pay. But what is corporate governance? In essence, it involves ensuring companies are properly directed and controlled, ie acting like an owner. Enron, Marconi, Tyco, Worldcom and Global Crossing were all products of an environment where company management failed to act like owners and where owners failed to act like owners. Warren Buffet, chairman of Berkshire Hathawa...