Corporate Governance: Why It Matters More Than You Think

Harmeet Singh Devgun
12 hours ago
3 min read

💯 How transparency and ethics build stronger companies and better leaders

“Managers that always promise to ‘make the numbers’ will at some point be tempted to make up the numbers.”

- Warren Buffett

“Good businesses are ethical businesses. Ethics are, in fact, the best form of governance.” - Charlie Munger

When you hear the term corporate governance, it might sound technical or dull, but it’s actually pretty simple. Governance is about how a company is run, who makes the big decisions, and whether those decisions are fair, transparent, and accountable.

Think of it like riding a bus: in a well-governed company, the driver knows the route, shares the plan, and keeps passengers informed and safe. In a poorly governed one, the driver hides the map, ignores the passengers, and takes random turns.

The result? Confusion, mistrust, and sometimes a total crash.

Good governance isn’t about complicated rules; it’s about responsibility, fairness, and trust.

🚀 How It Looks in the Real World

Strong governance is the backbone of every successful business. When a company is transparent and fair, it earns long-term trust from employees, investors, and customers alike.

Take Apple Inc., for example. Its board of directors is largely independent, and it communicates openly with shareholders through public reports (Apple, 2025).

This structure and honesty have built investor confidence and a loyal customer base; people trust Apple not just for its products, but for its principles.

Now compare that to Enron Corporation.

In 2001, Enron’s leaders hid billions in debt through accounting tricks. When the truth came out, the company collapsed almost overnight, wiping out thousands of jobs and billions in investments (Britannica, 2025). Enron remains one of the clearest lessons in what happens when companies sacrifice integrity for short-term gain.

💡 Did You Know? The Enron scandal led to the creation of the Sarbanes–Oxley Act (2002), a U.S. law designed to increase corporate accountability.

🌍 The Modern Trend

Today, governance goes beyond profit-making; it’s about doing business responsibly. Investors increasingly look at ESG (Environmental, Social, and Governance) factors when deciding where to invest.

Companies with independent boards, ethical leadership, and transparent reporting tend to be more stable and attract not just investors but also top talent. In an age where information spreads instantly, ethics and accountability are as valuable as innovation.

For instance, Unilever integrates sustainability directly into its business strategy. Its Sustainable Living Plan links executive pay to social and environmental targets, demonstrating that good governance can drive both ethics and profitability (Unilever, 2024).

Another example is Patagonia, the outdoor apparel company known for prioritizing planet over profit. Patagonia restructured its ownership so that the company’s profits are dedicated to fighting climate change and protecting the planet, a bold example of how governance can align business with ethical and environmental priorities (Patagonia, 2022).

The message is clear: to thrive in the modern economy, businesses must embed ethics and accountability at their core.

🎓 Why Students Should Care

So why should students care about corporate governance? Because it’s not just a business concept, it affects your career, investments, and even your side hustles. A company with weak governance may look profitable today, but it could collapse overnight, destroying jobs and investor money.

For finance students, understanding governance is a way to make smarter investment choices and identify companies built to last. For all students, understanding governance is a lesson in ethical leadership, the kind that builds strong teams, organizations, and reputations.

Before trusting or joining a company, ask yourself:

Who sits on the board? Independent experts or insiders?
Do they share financial information openly?
Have they faced scandals in the past?
Do they treat small shareholders and employees fairly?

Whether you plan to be an entrepreneur, investor, or team leader, understanding corporate governance helps you make better choices and stay on the right side of ethics.

“In a world where information spreads faster than ever, the most valuable currency a company can have isn’t money, it’s trust.”- Daniel Pink