Chapter 1 Governance and the Management of Global Markets

One of the main issues which has been of concern to corporate managers, both before the crisis and much more so during it, is that of corporate governance (Aras, 2008). Indeed for the last 25 years corporate governance has attracted a great deal of attention. Early impetus was provided by Anglo-American codes of good corporate governance.¹ Stimulated by institutional investors, other countries in the developed as well as the emerging markets have established a code normally based on these established codes for their own companies. Supra-national authorities like the OECD and the World Bank did not remain passive and developed their own set of standard principles and recommendations. This type of self-regulation was chosen above a set of legal standards (Van den Berghe, 2001) and, after some big corporate scandals, corporate governance has become central to most companies. It is understandable that investors' protection has become a much more important issue for all financial markets after a number of very visible and significant failures and scandals. Investors are demanding that companies implement rigorous corporate governance principles to achieve better returns on their investment and to reduce agency costs. Most of the times investors are ready to pay more for companies to have good governance standards. Similarly a company's corporate governance report is one of the main tools for investor' decisions. Because of these reason companies can not ignore the pressure for good governance from shareholders, potential investors and other markets actors.