What happens in the boardroom doesn’t stay in the boardroom

Transgressions in corporate governance resonate throughout the enterprise

Corporate governance has been in the forefront of public debate lately, thanks to such high profile events as options backdating, inflated CEO compensation packages and efforts to augment shareholder empowerment. These larger scandals have implications that reach beyond the boardroom into every aspect of an enterprise. Ultimately, the transgressions take their toll on all of society, according to Stuart Greenbaum, former dean of the business school at Washington University in St. Louis.

“Corporate governance has to do, first of all, with values and integrity,” Greenbaum said. “Most people have thought about in it a narrow frame and tend to focus on the more glamorous issues like executive compensation as if that were the only domain of corporate governance.”

Stuart Greenbaum

“When you get greater and greater concentrations of wealth and the disparities between rich and poor gets sufficiently wide, a slew of social repercussions emerge,” he said. “The willingness to share values deteriorates. Just consider what’s happening now in the United States, where you have 46 million people without health-care coverage. That’s a manifestation of these wider disparities in income and wealth.”

Editor’s note: Professor Greenbaum is available for phone, e-mail and broadcast interviews. Washington University has VYVX and ISDN lines available free for news interviews.