Businesses' quid pro quo

The word governance comes from a Latin word – gubernare – which means to steer. Cicero wrote: “He that governs sits quietly at the stern and scarce is seen to stir”. Thus, many conceptualise the board as being the navigator of the company and pictures of sailing boats often accompany the term. In The Wealth of Nations, published in 1776, Adam Smith noted that directors of companies are managers of other people’s money rather than their own. He pointed to the risk that they would not watch over the money of others with the same anxious vigilance as they would their own – and that is part of the problem with governance.