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Social sciences

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Encyclopedia of Sustainable Management


The increased focus on good governance and the development of best practice guidelines, often supported by legislation, has been in response to corporate scandals, such as Enron and Worldcom in the early 2000s, and the 2008 banking crisis. Good governance is increasingly recognised as a process where the ‘best practices' of yesterday become the standard practices of today. This increased focus has also coincided with a worldwide movement for corporate reporting on sustainability and corporate social responsibility (CSR) issues and a growing demand within the investment industry for investment products that are socially responsible (Benn and Dunphy 2013). Sustainable development is now part of the best practice model of corporate governance. There is a more equal recognition of stakeholders’ interests and the role of not only economic, but also social and environmental issues in laying the foundations for a new long-term model of economic growth. This is in contrast to the historic governing model that focused on the creation of shareholder value. However, despite increased attention and interest by policymakers and academics alike, a challenge that has not been unanimously resolved is the definition and measurement of ‘good corporate governance’. This chapter evaluates the main approaches to the measurement of corporate governance.

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