Principles of Corporate Governance

Poor corporate governance is the most widespread reason why a business gets into trouble. Substandard management manifests itself in many ways: for instance, by paying only lip service, or no attention at all, to forecasting and planning; failing to take account of changes in the marketplace and to position the company against market forces; falling behind advances in technology; and lacking sensitivity to product obsolescence. The consequence is top management turnover. The average tenure of a chief executive in America declined from nearly nine years in 1890 to just over seven in 2001,’ The Economist suggests.1