Formal corporate governance frameworks are well- entrenched among large companies: every respondent to our survey said their company had a formal corporate governance framework, and 84% said their company has had theirs for more than a decade.
Question: To the best of your knowledge, for how long have your company’s corporate governance policies been formalized? (Select one)
This widespread adoption can be credited to the increased awareness of the importance of good corporate governance after a few highly publicized fraud cases between 2000 and 2002, at Enron, WorldCom and Tyco, which revealed major corporate governance failures among companies that were hitherto looked up to as examples of well-run businesses. Moreover, the scandals led to the Sarbanes Oxley Act (known as SOX) in the US, which made governance much stricter in a wide range of areas. While SOX did not require US companies to create formal corporate governance frameworks, it did encourage their spread, by prompting senior executives to think hard about governance. Canada agreed to an equivalent law, known as C-SOX, in 2003.
Over the past decade, pressure to establish formal governance frameworks among the minority of US and Canadian companies that lacked one has increased further as investor interest in the ESG (Environmental, Social and Governance) agenda has grown.