Corporate governance and responsibility

Abstract

In the first article this quarter, President Anthony Santomero asks: What is the root of the corporate governance problems that have recently gained the spotlight? Is it the mega-merger frenzy of the 1980s? Overly optimistic forecasts of earnings? Innovations in the financial services industry? Although these factors undoubtedly played some role, President Santomero views governance problems as having deeper roots. In "Corporate Governance and Responsibility," he points out that the central dilemma is one of conflicting interests in organizations - what economists call "the principal-agent relationship."