Summary Of A Primer On Corporate Governance

A Primer on Corporate Governance, written by Cornelis A. Kees De Kluyver, is an introductory book that provides a clear, concise, and relevant information and understanding of the corporate governance. Corporate governance is about the balance of control and direction between different participants of an organization, and it is an essential and significant subject for those relevant people to study. Therefore, the objective of this book is to lead students and executives to a deep understanding of what the corporate governance is and to help them better prepare and succeed in their careers as people who work with or serve on a board of directors. The book also goes deep into details on how the corporate governance works and how should the boards …show more content…
De Kluyver starts with the description of shareholders. Shareholders own companies but do not run companies. Instead, they elect directors to appoint managers to run the companies. Different shareholders have different goals for the corporations. However, “the welfare of shareholders should be the primary goal of the corporation stems from shareholders’ legal status as residual claimants” (De Kluyver, p3). Then he mentions that corporate law was designed to cope with the relationship between the officers, the board of directors, and shareholders (p6). Corporate law is considered part of private law that based on four key premises: (a)indefinite life, (b) legal personhood, (c) limited liability, and (d) freely transferable shares (De Kluyver, p6). Later, he introduces that the objective of the Securities and Exchange Commission is to protect investors and to maintain the markets justly and efficiently. He then gives a brief history of corporate governance in America, providing several evidences caused by corporate governance.
Chapter two focuses on the argument on “the board’s responsibilities to shareholders versus the rights of all company stakeholders” (De Kluyver, p25). De Kluyver cites a statement from Lipton that directors are not only responsible for satisfying the shareholders’ interests; instead, “the role of the board is simply and dutifully to seek what is best for the company itself, which means balancing the interests of shareholders as well as other stakeholders” (De Kluyver, p26). On the other hand, he also cites other argument that is on the opposite side of this

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