13_CORPORATE_GOVERNANCE_v4 - CORPORATE GOVERNANCE IN THE...

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CORPORATE GOVERNANCE IN THE RESTAURANT AND BAR INDUSTRY SEGMENT 1  Corporations are ubiquitous in contemporary economic life. They are legal constructions through which societies transform economic resources – materials, capital, labor, knowledge – into the goods and services that sustain our everyday life. Indeed, the 2009 US Statistical Abstract 2 indicates that corporate income tax returns for 2005 reported asset ownership in excess of $66.4 trillion dollars, which produced a little over 70% of the total income generated by non- farm businesses in the United States. As legal entities – distinct from the people who populate them – corporations have many of the rights and duties of an individual. They can own, protect and utilize property, they can incur debt and they can enter into contracts with other entities. Because they are organizations of individuals acting in concert, the actions of corporations are more difficult to direct and control than an individual who directs and controls her own actions. Systems of management have arisen designed to ensure that corporations are able to conduct business in efficient, effective and appropriate ways. Atop these management systems is corporate governance. Most view corporate governance has as the system and structure that define corporate direction (mission and objectives) and provides oversight to corporate performance. While there are a variety of definitions for corporate governance, Sir Adrian Cadbury provides a particularly insightful one: Corporate Governance is concerned with holding the balance between economic and social goals and between individual and communal goals. The corporate governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. The aim is to align as nearly as possible the interests of individuals, corporations and society. 3
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This note was uploaded on 07/30/2011 for the course ACCT 560 taught by Professor Chandler during the Summer '11 term at University of Illinois, Urbana Champaign.

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13_CORPORATE_GOVERNANCE_v4 - CORPORATE GOVERNANCE IN THE...

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