Corporate governance. Theories, actors, and control systems in the age of new capitalism

Dear Readers, It is with great pleasure that I present the first international edition of Corporate Governance, a textbook designed to help students explore the complex world of corporate governance. Many years have passed since the first publication in 2014, during which much has changed, not only in terms of studies and theoretical developments, but also in regulatory and technological terms: several national and international directives have been issued (such as SRDI and II) and there is a rapid technological evolution, with strong changes in corporate governance, both in terms of digitalization and data and information management, both in the control and monitoring of business activities. These changes are introducing a new form of capitalism, the transition of which we believe will be long and characterized by evolutions that are not always linear and predictable. In this scenario, Universities will play an increasingly important role, not only for the transfer of knowledge, but also as reservoirs of innovation to be put at the service of the market, of companies, and, above all, of citizens. Today, many programmes are more sensitive to the issue and offer courses on corporate governance. Consequently, the textbook has been redesigned and updated to provide a contemporary approach that will better serve students, advisors, managers, and economic operators alike. Whether you are a business leader, management consultant, researcher, student, or just curious about the business world, this textbook will provide you with a guide to understanding how companies should be managed, supervised, and directed for the benefit of all stakeholders, the market, but also the abused shareholder. The approach adopted focuses on sustainability and ESG (Environmental, Social, and Governance) issues, in the hope that these terms will promote the establishment of a new perspective on corporate governance. Indeed, ESG is not just about corporate social responsibility (CSR), but also about corporate governance focused on long-term value creation for companies and society. In recent years, the global landscape has changed significantly, marked by the rise of a new form of capitalism that exerts its influence across companies and markets. This transformation underscores the growing importance and relevance ofcorporate governance. The proliferation of financial scandals in recent years, coupled with the ongoing impact of recurrent financial crises, has profoundly shaped the trajectory of global capitalist systems. These events have served as wakeup calls, signalling the need for comprehensive reforms and heightened scrutiny of governance practices. In this dynamic and evolving context, corporate governance is undergoing a paradigm shift towards greater transparency, accountability, and sustainability. Companies are increasingly recognizing the need to align their strategies and operations with long-term goals to mitigate risk and build resilience in the face of economic uncertainty. In addition, stakeholders, including investors, consumers, and regulators, are demanding higher standards of corporate behaviour and fostering a culture of responsible business practices. Throughout these changes, the role of corporate boards and management has become critical. Boards are expected to exercise diligent oversight and foster a culture of integrity and ethical behaviour throughout the organization. At the same time, senior management is tasked with driving innovation and value creation while adhering to corporate governance principles. As we navigate this evolving landscape, it is clear that the future of corporate governance lies in its ability to adapt to new challenges and embrace sustainable practices that create long-term value for all stakeholders. By promoting transparency, accountability, and ethical behaviour, corporate governance will continue to serve as a fundamental element of responsible business in the years to come. Designed to be an indispensable resource for the university classroom in business and management studies, this textbook offers a rich tapestry of insight and knowledge. Beyond students, it serves as a guiding beacon for professionals seeking to expand their expertise in the dynamic fields of business and management. By providing students with a solid foundation, this textbook will be able to form the new ruling class that will drive the era of new capitalism. Its multifaceted approach not only fosters intellectual curiosity, but also instils a sense of practical acumen essential for success in today’s competitive environment. In order to achieve this goal, we wanted to stress three core tracks: 1. The governance firm’s: from theoretical conceptualizations to applicative models; 2. The actors of corporate governance between ownership and management; 3. The control systems. 1. The Governance The new concept of corporate governance fits into the traditional dichotomy between shareholderism and stakeholderism and seems to outline a new scenario, in which the distance between the two concepts becomes less and less evident. Today, many scholars claim that the two perspectives, although distant, show many overlaps from which it is appropriate to start reconstructing the era of modern capitalism.With the emergence of the new capitalism and the theme of sustainability, a company that wants to be sustainable (in all its economic, social, and environmental components) can no longer limit itself to develop within a well-defined framework that includes ownership, corporate bodies, and the related control mechanisms; the emerging new capitalism seems to broaden the perspective of analysis to all the stakeholders with whom the company necessarily has to establish and maintain relationships that are more or less permanent. We are not talking about a company that is open to its stakeholders, a topic that is well covered in the management literature; we are talking about a new culture of corporate governance that must incorporate new elements, new purposes, and new impulses into its purpose. This evolution seems to introduce new business models, based on an expansion of values and governance objectives, but above all it focuses attention on the business system, distinct from the management and ownership system, what Morten Huse will soon describe in his matrix, when he refers to “firm’s value” as something different than “shareholder value”. Thus, if in the past the literature focused on the contractual relationship between different categories of subjects interested in certain rewards for their contribution, in the last decade there has been a change in trend, with greater importance and significance given to issues such as engagement, corporate social responsibility, sustainability, and corporate purpose; all elements that put the company at the centre of the debate as a system designed to survive over time. 2. The Actors In the new scenario, the actors of the company are also changing; not only the owners, who are increasingly understood as a complex system and not as a single actor, but also the management, the internal stakeholders, and the advisors (proxy advisor and proxy solicitor); the latter are increasingly central in shaping the governance dynamics of large companies. The phenomenon of robo-voting, for example, has shown how often institutional investors tend to vote “automatically”, closely following the instructions of proxy advisors. This behaviour obviously extends the issue of corporate governance responsibility not only to institutional and top-level actors, but also to formally external figures such as consultants and proxy advisors. From this point of view, the textbook analyses the actors, their responsibilities, and the guidelines that must be followed in order to ensure proper and sustainable corporate governance. The actors in the governance process are therefore also addressed through two themes that directly and indirectly characterize their behaviour: engagement and compensation. The chapter on engagement will highlight the change of rhythm brought about by the new capitalism, which seems to favour the creation of a less speculative company, not only oriented to profit, but characterized by new perspectives that ensure its survival in the long term. 3. The Control Systems The emerging control system is no longer what it once was: it is an increasingly intelligent control, driven by new technologies capable of managing an everincreasing and complex volume of data and information on the dynamics of corporate governance. It is true that the different methods of control still stem from the divergent interests of the various stakeholders who participate in the company in different capacities. These differences (due to issues of managerial opportunism, the pursuit of profit tout court, misalignment between the interests of the company and society, etc.) generate different responsibilities in terms of control. However, from this perspective and in view of the ongoing changes, the question arises: to which stakeholders and based on which characteristics can control rights be attributed and allocated? What needs to be verified/measured/controlled to promote the emergence of sustainable governance? Which stakeholders should be better protected in corporate governance processes? From this perspective, the textbook has sought to outline the need for a new approach to control, highlighting the importance of the concept of corporate compliance. This compliance is the need for conformity of corporate actions with all those regulations and best practices, mandatory or voluntary, applicable to companies. Such compliance requires the adoption of a “prevent, detect and report” system for behaviours that are increasingly oriented towards protecting the interests of the company and its survival, rather than those of individual actors. In this new logic, rather than control systems, the idea of a new culture of control should be brought out, in which compliance is not just a cosmetic and deceptive means, but increasingly a conscious and heartfelt choice: ethical, rather than just legal compliance. In this way, the focus shifts from the individual actor to the value of the firm: the firm is understood as a system designed to survive over time.