**1. Introduction**

The purpose of this chapter is to present the evolution of main corporate governance principles and frameworks, but not exclusively. As corporate governance effectiveness also depends on legal, regulatory and institutional environment, some important changes within this environment should be pointed out to better address the challenge behind the central issue: reassure shareholders and other stakeholders that their rights are being protected.

The growing complexity of businesses increased the desire to access management processes by standardized procedures. In this context, the Organization for Economic Co-operation and Development (OECD) published *The Principles of Corporate Governance* in 1999 [1]. The objective was to help policy-makers evaluate and improve the legal, regulatory, and institutional

framework for corporate governance, with a view to support economic efficiency, sustainable growth and financial stability. Since then, the principles have been adopted worldwide as an international benchmarking for policy-makers and stakeholders.

Corporate governance has been defined as a set of mechanisms of incentives and monitoring in order to assure a good management in behalf of company and its shareholders and others stakeholders. It should build an environment of trust, transparency and accountability for investments. Nevertheless, despite the improvement on business environment, some events periodically show that these principles are overlooked by important companies or even simulated.

After big corporate scandals like Enron, WorldCom, Tyco, Parmalat, the quality of financial statements and the role of auditors and accountants were broadly questioned and turned to be the central point in corporate governance issue for some couple of years. As a matter of fact, corporate scandals open wide weaknesses on internal and external controls over companies, which should be detected by good practices of governance. Effective corporate governance should reduce the likelihood of creative accounting and frauds.

Sarbanes-Oxley Act of 2002 approved by American Congress was a response to these scandals as a temptation to restore investor confidence by ensuring compliance. Effectively, it ended with a century of self-regulation of the accounting profession in the USA [2, 3]. Section 404 of this law requires extensive documentation, tests and assessments of companies' internalcontrol procedures. Corporate Governance framework has shown to be ineffective to avoid or to preview financial misstatement. SOX was then supposed to allow detecting problems on financial reporting processes and procedures before scandals.

The SOX Act created the Public Company Accounting Oversight Board (PCAOB) with the mission to oversee the audits of public companies and related matters, even in foreign companies as they were listed on U.S. stock exchange market. It was given authority to inspect accounting firms work, conduct investigations and take disciplinary actions. After an initial constraint, European Commission (EC) rules started to incorporate part of Sarbanes-Oxley Act to remodel Corporate Governance standard within European Union. Self-regulation market approach was no longer efficient to assure corporate governance even in Europe.

PCAOB issued a standard that requires notation about any significant defects or noncompliance in audit testing work. Many others procedures were imposed to auditors to ensure the quality of their assessment of internal controls like increasing disclosure requirements, disciplinary sanctions and effective independence.

Improvements led up to a largely movement–but not smooth, to broad adoption of international standards on accounting (IFRS, IPSAS) and on auditing (ISA). Even on corporate governance, EC concluded that European Union should adopt a few common essential rules. We should also point out the collaboration between two important securities market regulators (SEC in USA and CESR–Committee of European Securities Regulators) in order to enhance dialogue and prior detect emerging risks and problems as potential regulation to avoid them.

Corporate governance mechanisms continued to be improved. For instance, as institutional investor (mutual and pension fund) became important players in the majority of financial markets, more attention was given to their participation and interaction with corporate governance [4].

Despite this engagement after 2000 scandals, a new crisis based on accounting frauds astonished the world. Bank failures and financial crisis of 2008–2009 brought out a new type of governance failure: on a system [4]. An entire sector including its regulatory agencies decided to let it on.

Corporate governance pos-2008 addressed some more issues: recommendations for improvements in remuneration, risk management, board practices and the exercise of shareholder rights. The latest revision of the principles was conducted in 2015 at G20 Forum [5]. The revision was necessary to incorporate changes in both the corporate and the financial sectors.

Financial shenanigans and accounting frauds will never be avoided completely. When regulation is improved, by enforcement or incentives, another creative fraud will be designed. Corporate governance can help companies avoid biased decisions that could take them out of a sustainable trajectory but will not assure an ethic performance, at least, not alone. It is always important to consider incoherencies among business or market information, for a single company or for a system as a whole.
