A Primer On Corporate Governance And Society

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In A Primer on Corporate Governance, de Kluyver provides and introduction and understanding of corporate governance and looks at the relationship between governance and society. Corporate governance deals with the activities, rules and procedures by which corporate activity is directed. According to de Kluyver (2013) this book can help prepare individuals who wish to work with or serve on a board of directors and expand their perspective from a focus on management to one on governance. Giving us a better understanding on the relationship between governance and society, de Kluyver explains how corporate governance greatly impacts the responsibilities that tie a corporation’s management, shareholders and board of directors together. He argues …show more content…

De Kluyver argues that although shareholders own corporations, they typically do not run them, and instead “elect directors, who appoint managers who, in turn, run corporations”. Because shareholders are made “residual claimants”, this tends to produce “the strongest incentive to maximize the company’s value and generates the greatest benefits for society at large” (4). Management and directors have a fiduciary duty to perform in the best interests of shareholders; this structure suggests that investors face “two separate so-called principal-agent problems with management whose behavior will likely be concerned with their own welfare, and with the board, which may be beholden to particular interest groups, including management”

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