But what constitutes good governance? More than 70 countries now have codes or guidelines that spell out the principles that directors and managers should follow to achieve governance goals. These usually are not mandated by law, and are designed to encourage voluntary compliance. The codes lead to definitions of “best practices,” which aim to define specific policies and procedures that foster good governance.

Companies that deviate significantly from the codes’ recommendations deserve special scrutiny, and may produce good investigative stories. Highlighting such noncompliance is one of the ways that media can focus attention on companies that may even be operating illegally.

Compare other countries’ governance codes with that of your own country: http://bit.ly/IttIHR

For example: Most codes call for a board to have several independent directors. “Independent” essentially means a person who is free of material relations with the company’s management or others involved with the company. Unclouded by conflicts of interest, such a director can make decisions based on the potential benefits for the company and its shareholders.

A board stacked with friends or relatives of the top managers is less likely to act as a check and balance in serving shareholders’ interests.

Companies worldwide often have dominant shareholders who are members of the same family. This is particularly common in emerging markets. Often, the family dominates the board and management, perhaps exerting influence through special shares that control voting power, even though the family may own only a small percentage of total shares.

Also common in emerging markets are enterprises that are either owned by the state or essentially controlled by the state through the make-up of the board and management. This can lead to decisions being made for political reasons rather than for the benefit of shareholders.