2.3.2 To define the concept of corporate governance

Although the concept of corporate governance can be traced back several centuries (see section 2.2.2), it gained importance in the last decades due to i.a. the corporate scandals. The term 'corporate governance' emerged in the 1970s and in 1976 Ralph Nader provided in his "Taming the Giant Corporation ": "the earliest available theorization of the term 'corporate governance' whose meaning combines analogical thinking from the governance ofdemocracy to the "governance" of the corporation" (Ocasio and Jospeh 2005, p. 167) (Shleifer and Vishny 1997, p. 738).

In their paper Becht, Bolton and Roell acknowledge this analogy of the words ' corporate' and ' governance' as well (Becht, Bolton et al. 2005, p. 2). Apart from the analogy, various explanations of the concept of corporate governance have been provided in literature and politics and a number ofdefinitions have emerged over the years. All over the world, the term corporate governance evolved due to cultural adaptation and material events such as the corporate scandals in the 1970s and 2000s, the rise of the institutional investors (Ocasio and Jospeh 2005, p. 176) and the recent financial crisis. Although aware of these constant developments, academics and politicians have tried to find a comprehensive and non-temporary definition for corporate governance. For example, according to Shleifer and Vishny: "corporate governance deals with the ways in which suppliers offinance to corporations assure themselves ofgetting a return on their investment" (Shleifer and Vishny 1996, p. 2). Shleifer and Vishny call their perspective a straightforward agency perspective (Shleifer and Vishny 1997, p. 738). Shleifer and Vishny acknowledge that their definition of corporate governance is not comprehensive. Legal protection of investors and concentration of ownership are also important elements of corporate governance (Shleifer and Vishny 1997, p. 738) (Shleifer and Vishny 1996, p. 2). More recently, in its Dutch Corporate Governance Code of 2008, the Dutch Corporate Governance Committee described corporate governance as: "good entrepreneurship, including integrity and transparency ofdecision-making by the management board, and proper supervision thereof, including accountability for such supervision".

The OECD1 Principles of Corporate Governance of 2004 which are considered to be an international benchmark for policymakers, investors, corporations and stakeholders worldwide give a broad, though internationally highly accepted definition of corporate governance: "Corporate Governance involves a set of relationships between a company s management, its board, its shareholders and other stakeholders. Corporate governance also provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined'.

The OECD and the Dutch definition of corporate governance is based more on a stakeholder approach than an agency perspective. Obviously, the contents of all definitions are influenced by the views of the draughtsman of the definition. Mallin overcomes the difficulties of giving one sound definition for corporate governance by mentioning the most important features of corporate governance:

to ensure an adequate and appropriate system of controls;

A sound and comprehensive definition is hard to give: corporate governance is constantly evolving and many disciplines are involved. It is preferable not to give any definition, but to describe the concept of corporate governance whilst mentioning that the concept is constantly evolving due to changes in its surroundings. The five features involve tools to reach good corporate governance within firms. Taking the above into account, the five features of corporate governance as given by Mallin provide an overview of what corporate governance currently involves and are clearly linked to the underlying theories.