Tightening corporate governance

Tightening corporate governance in multinational corporations (MNCs) is difficult because of confusion over the proper conception of governance, competing pressures on and complex attributes of MNCs, and the fact that many prescriptions are untested. This article documents multiple pressures on MNCs and recommends how management should cope with those pressures. Tightening governance directly concerns pressures from investors, exchanges, and regulators for adoption of recommended standards and practices to increase financial transparency and fiduciary accountability. MNCs also face pressures for corporate social responsibility (CSR). Short-term financial performance and longer-term financial viability may conflict with one another and also with the social and environmental components of triple bottom line performance. MNCs are organizationally complex to manage. Geographical diversity peculiarly means great variance in legal systems, other non-market institutions, and MNC governance and CSR approaches across country units. International standards for governance and reporting are not well established; and enforcement occurs largely by stock exchanges and national jurisdictions.