The concept of corporate governance can be interpreted in different ways and can have different meanings depending on the political orientation and the stakeholder perspective. Here it is understood in its widest definition: “Corporate governance is the system in which companies are directed and controlled” . There are obviously different possible governance arrangements within such definition. These will essentially depend on the combination of three core sources of law:
- capital market regulation, including laws and other regulations that apply to corporate access to equity and debt financing;
- corporate law, including the accountability mechanisms between shareholders and management; and
- labour regulations that determined the rights of workers within the firm.
Other sources of law will influence national corporate governance regimes, such as competition and tax laws (including corporate and household income and capital tax regimes). More broadly, the role of government in the economy and the extent to which it is tolerated as an economic operator via active industrial policies and state-ownership is a key determinant of corporate governance. As the substance and the respective weight of those sources of law and public policies vary from country to country so will the various accountability mechanisms between the core constituencies of the firm – shareholders, management, workers – and with external parties investing in the company – creditors, suppliers, customers, local communities, NGOs – as well as with regulators, other market-based gatekeepers such as auditors.
Key web links on corporate governance & trade unions:
Global Unions Committee on Workers' Capital, www.workerscapital.org
ETUI's Portal on Worker Participation: www.worker-participation.eu