The Rise of Principles-Based Corporate Governance

In late July, executives at thirteen major companies and investor institutions published and widely advertised their “Commonsense Principles of Corporate Governance” for public companies, boards of directors and shareholders. According to its introduction, the Commonsense Principles’ intent is to “provide a basic framework for sound, long-term-oriented governance,” which is certainly a commendable undertaking. As I read through its various recommendations and guidelines, a few things came to mind.