Since at least 2018 there has been a major shift within ‘Business America’ away from ‘shareholder capitalism’ towards ‘stakeholder capitalism’, a move which has already had some global impact. Our approach is, however, realistic and we also make the reader aware of the challenges for countries, particularly where shareholder primacy is deeply embedded in statutory law and case law, to move from shareholder primacy to an all-inclusive stakeholder model of corporate law and corporate governance. In this chapter we extract some of the ‘essential’ principles of corporate governance and illustrate that there is a ‘business case’ for good corporate governance. We conclude the chapter by discussing broader trends and debates with a present and likely future impact on corporate governance. These include what can be described as the ‘Fourth Industrial Revolution’; the widening gap between the ‘rich’ and the ‘poor’, or, put differently, ‘the price of inequality’; the growing problem regarding profit-sharing or capital distribution in large public corporations; and a short discussion of the so-called ‘Great Reset’.

In this chapter we establish the foundations for extracting principles of contemporary corporate governance. We begin the chapter by providing our own definition of the term ‘corporate governance’. The reason for this is to enable the reader to gain a good understanding of how we approach the principles of contemporary corporate governance in this book. We have adjusted the definition of corporate governance in each of the previous four editions, as well as in this edition. The reason is that corporate governance is a dynamic concept and we strive to keep the definition updated to reflect contemporary principles of corporate governance.