Title: Internal governance: the neglected pillar of good governance

Authors: Lutgart A.A. Van den Berghe

Addresses: Vlerick Leuven Gent Management School, GUBERNA, Ghent University, Reep 1, B-9000 Gent, Belgium

Abstract: The aim of this contribution is to provide a better insight into what internal governance (IG) is all about and why IG is so essential for reaching the goal of good governance. This article focuses primarily on the relevance of governance within groups of companies – referred to as |intra-group| governance – and tackles this topic from a legal as well as from an economic perspective. The legal analysis highlights the lack of a comprehensive framework in group law both on a European and Belgian level. The economic analysis tackles some false business arguments in order to provide a rationale for installing boards of directors on subsidiary level (the so-called |subsidiary governance|) and their potential of being supportive to existing corporate governance mechanisms.

Keywords: internal governance; corporate governance; internal control; intra-company governance; subsidiary governance; groups of companies; multidisciplinary approach; intra-group relations; group policy; group law; good governance; Europe; Belgium.

DOI: 10.1504/IJBGE.2009.023792

International Journal of Business Governance and Ethics, 2009 Vol.4 No.4, pp.427 - 442

Published online: 11 Mar 2009 *

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