Good governance means the identification, measurement and management of the risks of the enterprise. As such, good governance does not depend on the specific legal rules of particular countries. Those rules are simply a component of the analysis.
To be able to identify, measure and manage those risks, especially reputational risks, the enterprise must have the mechanisms, policies, procedures and controls that will enable it to do so.
Through the use of cases and role playing, we then examine some of the key decisions that have a great impact on the governance of the enterprise: remuneration of senior management, succession planning by the CEO, composition of the board and qualifications of board members. Some of the cases tell a story of spectacular failure in governance and we try to derive the lessons from such failures: were appropriate mechanisms and processes in place and whether they were followed.
Since many students hail from countries with a tradition of either family-owned or state-owned enterprises we devote attention to the special governance issues of such enterprises. As foundations acquire an ever larger role in world business affairs-the Gates Foundation budget dwarfs that of many smaller countries-we touch upon the unique governance issues facing foundations.
While students may not yet be at the career level where board membership is directly relevant, many students hoping to make a career in venture capital and/or private equity will find issues of corporate structure, proper board composition, control mechanisms, duties of board members to be highly relevant to their professional development. Similarly, those aiming to work for hedge funds will find that an understanding of what constitutes good governance will have an impact on how the market perceives and values companies.