Corporate Governance

Corporate governance refers to the systems of rules, practices, and relationships through which companies are directed, controlled, and held accountable, involving boards of directors, managers, shareholders, employees, regulators, and other stakeholders. Adolf Berle and Gardiner Means argued in The Modern Corporation and Private Property that the separation of ownership from control gave professional managers considerable power over dispersed shareholders, and agency theory, developed by Michael Jensen and William Meckling, frames governance as a problem of aligning managerial behavior with owners’ interests. Stakeholder approaches, associated with R. Edward Freeman, contend that firms are accountable to wider groups. Sociologists have examined governance through networks and power. C. Wright Mills’s account of the power elite and Michael Useem’s study of the inner circle explored interlocking directorates, while Neil Fligstein described how shareholder value conceptions of control reshaped American firms. Mark Mizruchi analyzed the fragmentation of the corporate elite, Gerald Davis examined financialization, and Peter Hall and David Soskice compared national models in varieties of capitalism, contrasting shareholder-oriented and coordinated systems. Scandals such as Enron prompted reform. Corporate governance remains central to research on power, inequality, regulation, finance, and accountability.