2.4.2 Corporate governance

In various countries governments took the first steps to investigate the fading confidence in directors of listed companies and the capital market. In close consultation with listed companies, the stock exchange and investors associations, various committees have been established over time to investigate and give advice.1 As part of the modernisation process of European corporate law the European institutions have also acquainted themselves with the subject of corporate governance. Taking into consideration the ever-increasing internationalisation of businesses, the growing integration of financial markets and the transnational nature of accounting scandals, most would agree that corporate governance needs to be dealt with at an international level. However, the rules on the distribution of powers among the components of a company and the rights and duties conferred on them differ for every jurisdiction. On a European level, too, there is no real harmonisation of these kinds of rules. This situation gave rise to the idea that each jurisdiction should take initiatives to restore the confidence in the directors of companies within that particular jurisdiction. At a European level the corporate governance process can be advanced by extending the European rules on transparency of reporting.2

As is the case with CSR, the business community tries to avoid corporate governance being forced upon them through strict, detailed new rules. That is why they advocate self-regulation. The business community argues that the decision-making process within a company should be flexible and therefore not restricted by strict rules. Moreover, there may be situations in which a company decides to deviate from the general perception of what constitutes good corporate governance. Besides, views on corporate governance tend to change all the time, and a company may want to decide on the basis of the most recent developments in the field. It can be argued that this can be better realised by self-regulation.