Corporate governance: shareholders, employees and stakeholders

Why take an interest in corporate governance? This topic does not necessarily make the news every day and tends to be brought to the forefront only in events of failures of scandals: for instance, when top executives are fired, or when their extraordinary remunerations (taking the form of complex mechanisms of bonuses, golden parachutes or other stock options) are revealed. Corporate governance seems to be a second-rate economic subject compared to macro-economic topics such as growth, unemployment, monetary policy, fiscal policy or public debt management. However, chapter 2 has shown that corporations have become a central player of contemporary economies. The collapse of planned economies has relegated States to the background, with governments intervening mostly to regulate the functioning of the markets (through laws, regulations or incentives). In this context, it becomes crucial to look at the way companies are managed, and the question of the orientation and interests pursued by the company becomes essential. Should corporations only pursue private interests and seek maximum profit, as taught by neoclassical economics? Can they pursue common good objectives, or would this be incompatible with their very nature, as asserted by Milton Friedman asserted in a famous 1970 article? Who decides on their strategy? How and to what extent should company open up to stakeholders and Corporate Social Responsibility (CSR)? All these questions refer, in one way or another to issues of governance. As we shall see in this chapter, governance is a determining factor for the economic, strategic and even political orientation of private companies.