13. Corporate governance

This chapter surveys corporate governance. It identifies the key problem of the separation of ownership and control in companies that are not owner-managed. Shareholders are seen as the owners of the company but directors manage the company and can do so for their own benefit rather than the shareholders’. There is a list of the numerous legal controls on directors, which are studied in other chapters. There is discussion of two ways of looking at directors, either as stewards who must account for their actions to the owners or as entrepreneurs whose wealth-creating work deserves reward. The UK Corporate Governance Code, which applies to premium listed companies, is discussed, as is shareholder activism.