"Corporate Governance: Who should be in charge?"
Jane Katz
Federal Reserve Bank of Boston Regional Review, October 1997.
The article explains the issues, debates and controversies surrounding the role of corporate governance in improving firm value. In addition to explaining the current status of the debate on proper corporate governance, the author argues that meeting stakeholder interests beyond those of the shareholders must be prioritized. Katz asserts that employees, among others, are important stakeholders that cannot be ignored. The article also has important implications for large investors who value corporate governance. Katz notes, “Bigger firms must coordinate a complex web of relationships among sometimes conflicting constituencies. Corporate governance is concerned with the rules and practices that determine how large corporations are controlled and how they relate to shareholders, creditors, employees, customers, suppliers, and even the communities in which they operate.” Katz also adds that “an efficient governance system places control in the hands of those with the incentive and means to create wealth.”
