With the public controversy generated by the explosion of hostile takeover activity during the 1980s, we again are witnessing debate about theories of the corporation. Responding to widespread concerns about the harsh impact of hostile takeovers on target company employees and others, state legislatures, courts, and commentators have focused on the notion of the corporation as aggregation, defined broadly to include not just shareholders and management but also other participants in the corporate enterprise. This broader conception serves to justify corporate law reforms responsive to the interests of these various non-shareholder, non-management constituencies. Opponents of regulation that impinges on shareholders’ financial interest in unimpeded access to takeover bids (regardless of impact on non-shareholders) have responded with argument based on their nexus-of-contracts interpretation of the corporate aggregation, but their efforts have proved to be unpersuasive in the legislatures and courts.
The wave of globalization and industrialization trends experienced all over the world has resulted in the emergence of large corporations as well as conglomerates. These large corporations contribute immensely to the social, economic development of their host nations. This paper explores the concept of corporate governance as well as the need for corporate governance. Also examined are the basic principles of corporate governance. The focus of this paper is on the external group of individuals (stakeholders) to the organization. This paper defines them as well as their roles in ensuring corporate governance and wealth creation for the business organization. It concludes by making recommendations on how businesses can strike a balance between achieving organizational goals and stakeholder needs.