In 2009, the International Finance Corporation and the UN Global Compact released a
report, Corporate Governance - the Foundation for Corporate Citizenship and Sustainable
Business, linking the environmental, social and governance responsibilities of a company to its
financial performance and long-term sustainability.
Most codee largely voluntary. An issue raised in the U.S. since the 2005 Disney
decision is the degree to which companies manage their governance responsibilities; in other
words, do they merely try to supersede the legal threshold, or should they create governance
guidelines that ascend to the level of best practice. For example, the guidelines issued by
associations of directors, corporate managers and individual companies tend to be wholly
voluntary but such documents may have a wider effect by prompting other companies to adopt
in 19th century United States, state corporation laws enhanced the rights of corporate boards to
govern without unanimous consent of shareholders in exchange for statutory benefits like
appraisal rights, to make corporate governance more efficient. Since that time, and because most
large publicly traded corporations in the US are incorporated under corporate administration
friendly Delaware law, and because the US's wealth has been increasingly securitized into
various corporate entities and institutions, the rights of individual owners and shareholders have
become increasingly derivative and dissipated.
In the 20th century in the immediate aftermath of the Wall Street Crash of 1929 legal scholars
such as Adolf Augustus Berle, Edwin Dodd, and Gardiner C. Means pondered on the changing
role of the modern corporation in society. From the Chicago school of economics, Ronald
Coase introduced the notion of transaction costs into the understanding of why firms are founded
and how they continue to behave.
US expansion after World War II through the emergence of multinational corporations saw the
establishment of the managerial class. Studying and writing about the new class were
several Harvard Business School management professors: Myles Mace(entrepreneurship), Alfred
D. Chandler, Jr. (business history), Jay Lorsch (organizational behavior) and Elizabeth MacIver
(organizational behavior). According to Lorsch and MacIver "many large corporations have
dominant control over business affairs without sufficient accountability or monitoring by their
board of directors."
In the 1980s, Eugene Fama and Michael Jensen established the principal–agent problem as a
way of understanding corporate governance: the firm is seen as a series of contracts.
Over the past three decades, corporate directors’ duties in the U.S. have expanded beyond their
traditional legal responsibility of duty of loyalty to the corporation and its shareholders.
In the first half of the 1990s, the issue of corporate governance in the U.S. received considerable
press attention due to the wave of CEO dismissals (e.g.: IBM, Kodak, Honeywell) by their
boards. The California Public Employees' Retirement System (CalPERS) led a wave
of institutional shareholder activism (something only very rarely seen before), as a way of
ensuring that corporate value would not be destroyed by the now traditionally cozy relationships
between the CEO and the board of directors (e.g., by the unrestrained issuance of stock options,
not infrequently back dated). In the early 2000s, the massive bankruptcies (and criminal malfeasance)
of Enron and Worldcom, as well as lesser corporate scandals, such as Adelphia
Communications, AOL, Arthur Andersen, Global Crossing, Tyco, led to increased political
interest in corporate governance. This is reflected in the passage of the Sarbanes-Oxley Act of
2002. Other triggers for continued interest in the corporate governance of organizations included