Governors and directors: Competing models of corporate governance

Introduction

Why do we use the term ‘corporate governance’ rather than ‘corporate direction’? After all, companies are run by boards of directors, not courts of governors. Our aim in this article is to examine corporate governance in historical perspective to understand how the term ‘corporate governance’ came to dominate modern discourse. We achieve our aim first of all by using both dictionaries and the Google Books corpus of English language publications to identify early usages of the word ‘governance’. We then draw on a range of previous studies in the accounting, business and legal history literatures to identify significant early examples of governance structures and practices in both commercial and public interest organisations (such as charities, hospitals and schools). Relevant contributions were analysed for evidence of governance, although we acknowledge that this word was rarely used in the context we examined. Nonetheless, various studies of how organisations were governed could be identified (though we do not claim that we provide a complete review of all entities that have been studied historically – in particular, our review examines governance largely in a British context).

Our work contributes to the increasing awareness that simplistic versions of popular theories of governance, such as agency theory, do not provide a full understanding of the observed phenomena, particularly in a historical perspective. We draw on two models of corporate governance developed by Napier (1998) to illustrate this point. We find that early business organisations in Britain were usually headed by a ‘Governor’, who combined many of the characteristics of a modern chairman of the board of directors and chief executive officer (CEO), but who, unlike the modern board chairman, was elected directly by the members of the organisation. On the other hand, the title of ‘governor’ in public interest organisations was often granted to anyone who had made a significant contribution to the organisation’s funds, so that some entities could have several hundred governors. The term ‘director’ for a member of a corporate board emerged in the late seventeenth century, but the adoption of ‘corporate governance’ as a general expression in the 1970s probably reflected a desire on the part of early adopters of the term to emphasise what they saw as the ‘political’ nature of the management of organisations.

In the next section of the article, we examine the emergence of ‘governance’ as a word used in literary and legal sources. We then review some of the earliest corporate entities in Britain and observe how their governance structures, while certainly precursors, differed from modern models. This section looks at both commercial and public interest entities. We go on to consider how the roles and responsibilities of directors of the modern limited company in Britain developed in the nineteenth and early twentieth centuries, and the effect of this on governance structures. We conclude with a tentative answer to our initial question.

The emergence of governance

The nineteenth-century English novelist Anthony Trollope gained a reputation for reflecting current social phenomena in his fiction, and thus providing insights into life in the mid- to late-nineteenth century. ¹ Trollope’s fourth novel, but the first to gain a lasting reputation (Glendinning, 1992: 215), was The Warden, published in 1855. This novel tells the story of the Rev. Septimus Harding, the Warden of Hiram’s Hospital, a charitable almshouse in the fictional cathedral city of Barchester. Harding enjoys an enviable lifestyle because the Warden of Hiram’s Hospital is entitled to all of the charity’s substantial income after covering the modest living expenses of the 12 residents of the almshouse. After a press campaign for reform, Harding feels he has no alternative but to resign as Warden. As Trollope himself notes, and as Chadwick (1995: xiv) explains in his introduction to a recent edition of The Warden, the case of Hiram’s Hospital is based on a contemporary scandal in the early 1850s, that of the Hospital of St Cross in Winchester. The Master of the Hospital was in receipt of an annual income of over £2,000, out of which he paid less than £200 to support a small number of residents of the Hospital and to provide a salary for a resident chaplain. The Hospital of St Cross was seen as a blatant case of abuse of an ancient charitable foundation, particularly as the Master at the time had been appointed by the Bishop of Winchester, who just happened to be the Master’s father.

Trollope’s next novel, published in 1857, was a sequel to The Warden, and established his reputation as a major author. This novel was Barchester Towers. The details of this novel are not important for the present study, but Trollope begins by recapitulating the plot of The Warden. In doing so, he refers to ‘A political pamphleteer’ who ‘had produced a few dozen pages […] intended to give an infallible rule for the governance of all such establishments’ (Trollope, 1857: 11, emphasis added). This quotation is one of the few sentences in the corpus of English literature up to the mid-twentieth century to contain the word ‘governance’. ² Miller and Napier (1993) have warned against reading modern meanings of terms (or indeed modern terminology itself) back into the past, noting that ‘Genealogies of calculation put much more emphasis than do traditional approaches on the contemporaneous existence of a particular language or vocabulary’ (p. 639). In studying governance in a historical perspective, therefore, care needs to be taken to be sensitive to historical usages of the word ‘governance’ as well as to guard against the temptation to assess historical practices uncritically against what would be considered ‘good governance’ today. The word ‘governance’ itself has shifted in sense from referring to ‘the office, function, or power of governing’, through ‘conduct of life or business’, to ‘controlling, directing, or regulating influence; control, mastery’. ³

Moreover, the context in which the word ‘governance’ is most frequently used has changed dramatically through time. An examination of the Google Books corpus of English language publications ⁴ shows that ‘governance’ tended to be used more frequently than average in periods where there were debates about how England (later Britain) should be governed. The word appears most often in the 1580s; the 1640s and 1650s, during the English Civil War and Commonwealth periods; the 1680s, during the ‘Glorious Revolution’; and the 1710s and 1740s, during Jacobite challenges to Hanoverian rule. These were all periods when the role of the monarch in government faced challenges. This political usage of ‘governance’ was to be echoed in the 1970s by the recently retired British prime minister, Harold Wilson, who published a book called The Governance of Britain (Wilson, 1976). This book claimed to discuss how Britain was actually governed and how government should be carried out. At the time, Wilson’s use of the word ‘governance’ in his title was considered unusual, even pretentious, with reviewers describing the word as ‘pompous’ and Wilson’s approach as ‘emanat[ing] a certain smugness’ (Stansky, 1977: 1260).

However, three decades later, Wilson’s title was to be recycled by another British prime minister, Gordon Brown, for an official UK Government discussion document on the British constitution (United Kingdom Government, 2007). The use of the word ‘governance’ was no longer considered pretentious in a political context. This is not surprising to political scientists. Pollitt and Hupe (2011) consider that ‘governance’ along with ‘accountability’ and ‘networks’ have become what they call ‘magic concepts’. According to Pollitt and Hupe (2011: 643), magic concepts exhibit four characteristics: broadness (‘they cover huge domains, have multiple, overlapping, sometimes conflicting definitions’), normative attractiveness (‘they have an overwhelmingly positive connotation; it is hard to be “against” them’), implication of consensus (‘they dilute […] traditional social science concerns with conflicting interests’) and global marketability (‘they are known by and used by many practitioners and academics – that is, they are fashionable’). These concepts may be valuable more for their rhetorical connotations than their practical applications. The fact that they are notoriously difficult to define allows them to be used to achieve a variety of agendas, and Pollitt and Hupe (2011) observe, ‘the term “good governance” has spread pandemically through the community of international organizations concerned with public administration’ (p. 646).

From this discussion of governance in the political science literature, and Trollope’s reference to governance of charities, we can conclude that governance was originally a term used in the context of how nations are governed, and its ambit became extended to local government and to ‘public interest’ entities such as almshouses, schools and hospitals. The term ‘corporate governance’ is a much more recent creation. A search for the expression ‘corporate governance’ in publications from 1600 to 1960 indexed on Google Scholar ⁵ produced an initially promising 248 citations, but virtually all of these have been misdated by Google Scholar, and refer to much more recent publications. A paper that is widely cited as the earliest scholarly reference to ‘corporate governance’ is ‘The close corporation and the law’ (Israels, 1948), but this uses the expression only once, without providing any definition or explanation. Ocasio and Joseph (2005) see the term ‘corporate governance’ as emerging in the United States in the early 1970s, in the context of growing concerns that large multinationals were abusing their economic strength. This stimulated attempts by consumer advocates, most notably Ralph Nader, to appeal to political notions of governance to enhance the accountability of corporations to broad constituencies (Nader et al., 1976).

However, Ocasio and Joseph (2005) document how this early linking of corporate governance to what would now be referred to as ‘stakeholder democracy’ (see, for example, O’Dwyer, 2005; Turnbull, 1994) became overtaken by a positioning of ‘corporate governance’ as an aspect of finance. Ocasio and Joseph (2005) show that ‘The vocabulary of shareholder rights replaces the vocabulary of democratic political economy’ (p. 171). In his own history of corporate governance, Cheffins (2013) shows how, by the early 1980s, scholars in the neoclassical economics–based ‘law and economics’ movement had ‘captured’ corporate governance from political reformers using the recently formulated agency theory approach of Jensen and Meckling (1976) and Fama (1980). This spelled out that what mattered in corporate governance was the relationship between the corporate board (as the representative of the owners of a company) and the company’s management, particularly the CEO, and that problems within this relationship could be minimised through clever drafting of contracts rather than requiring external regulation. Ocasio and Joseph (2005: 167) ascribe to Richard M. Cyert, the co-author (with James G. March) of the seminal contribution to the management literature, A Behavioral Theory of the Firm (Cyert and March, 1963), the view that defined corporate governance ‘in terms of the more narrow conception of board relationships with the CEO and the shareholders’.

This narrowing of the understanding of corporate governance has had an unfortunate effect, as it tends to take for granted that the central issue of governance is the board of directors. This includes how the board relates to owners in particular and broader stakeholders in general, how members of the board relate to each other and how the board relates to management (Gevurtz, 2004). Yet the modern corporate board stands at the end of a long history of what, despite the possible anachronism of the expression, is conveniently termed ‘corporate governance’. Different governance structures have existed at different times and in different places, and even key terms such as ‘board’ and ‘director’ have emerged at specific junctures.

Governance in early British organisations

British corporate boards in the nineteenth century

The Joint Stock Companies Act 1844 allowed companies in Britain to be incorporated by simple registration, rather than requiring a Royal Charter or specific act of parliament. Nonetheless, large entities such as railway companies still needed an individual act of parliament, which usually stated the size of the board of directors. The Companies Clauses Consolidation Act 1845, which applied to such ‘statutory’ companies, provided that ‘The directors shall have the management and superintendence of the affairs of the company’ (sect. 90), required the directors to elect a chairman (sect. 93), and allowed for committees of directors (sect. 95). The directors themselves were elected by the members of the company at annual general meetings. It is worth noting that the chairman was chosen by the elected directors from among their number, rather than being voted on by the members.

Some early railway companies reflected assumptions as to ideal board structures carried over from previous centuries. For example, the Great Western Railway was originally established in 1833 with a 24-member board of directors, made up of two 12-member committees, the ‘London Committee’ and the ‘Bristol Committee’, reflecting the two cities that the railway was intended to link. The company was run on a day-to-day basis by two secretaries, one in London and the other in Bristol. The London secretary, Charles A. Saunders, had remarkable longevity, because as late as 1861 he was the railway’s sole secretary and chief superintendent (the equivalent of a modern chief operating officer), though he was not one of the 15 directors of the company. ¹⁶

The Great Western Railway’s governance structure, like that of other statutory companies and indeed most companies registered under the Joint Stock Companies Act 1844 and its successors, follows what Napier (1998: 113) has labelled the collectivity model of corporate governance. This reflects the legal view that a company literally is the members (in a commercial concern these would be shareholders because the company’s capital would consist of shares), acting as a group. Ultimate power lies with the company’s members at the company’s general meetings. The members elect a board of directors to manage and supervise the company on their behalf. The directors are not involved in the day-to-day management of the company (here the collectivity model differs from the model of governance in early chartered companies, where the governor and assistants or committees would be active in the company’s business). Instead, the directors hire managers to undertake the operations of the business. The directors are officers of the company, but not employees, and are remunerated in the form of fees rather than salaries.

Originally, managers might attend board meetings but would not be members of the board. However, British company law began to recognise the status of ‘managing director’, where it would be convenient for the full-time salaried manager of the company to be a member of the board. In some cases, the founder of a business would continue as managing director (often also as chairman of the board of directors) after the flotation of the company on a stock exchange. One advantage of being a managing director was that companies could specify, in their Articles of Association, that a managing director was not subject to periodic election by the shareholders (Davies, 1997: 181). The rationale for this was that the managing director was an employee of the business, and hence was subject to dismissal by the board of directors. However, in practice, particularly where the managing director was the founder of the business, this provision would entrench the founder on the board of directors.

Within the collectivity model, as well as appointing directors, the shareholders would appoint auditors, who would themselves be members of the company. Before the emergence of professional auditors, these individuals would be ‘representative shareholders’ in the same way as the company directors. Both the board of directors and the auditors would monitor the actions of the managers, in different ways – the board would likely undertake monitoring on a regular and ongoing basis while the auditors would normally simply review the financial statements prepared by the managers on a periodic basis. However, sometimes the auditors would be asked to carry out special investigations, especially where the managers were suspected of misconduct or poor commercial decisions. The managers would report to the directors, and in some cases so would the auditors, particularly if they had undertaken a special investigation. Finally, both the directors and the auditors would report, through the general meeting, to the shareholders. A schematic diagram of the collectivity model is shown in Figure 1.

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Figure 1.

Collectivity model of corporate governance.

In the collectivity model, there is a clear separation between the board of directors and the managers. However, as more managers are appointed as directors, the collectivity model begins to mutate. Directors have less of a role in monitoring management if they actually are the managers. The auditors become the main monitors, but shareholder auditors do not have the skills to undertake this responsibility effectively, so are gradually replaced by professional auditors. Instead of regarding the ownership of shares in the company as a necessary requirement to have the interest to act as an auditor, professional auditors see ownership of shares as a potential threat to their independence, and so professional auditors are no longer ‘representative shareholders’ but rather ‘representatives of the shareholders’ in monitoring the managers of the business. Napier (1998) named the governance structure that developed with the convergence of directors and managers the business company model, and a simplified version of this is set out in Figure 2.

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Figure 2.

The business company model of corporate governance.

The relationships involving shareholders, directors, managers and auditors that are shown in Figures 1 and 2 have been analysed extensively at a theoretical level, using various approaches. Stewardship theory, for example, suggests that shareholders nominate and elect directors to protect their interests, while directors accept a fiduciary duty to be stewards of those interests (Tricker, 2015: 66). On the other hand, agency theory sees the owners of the business employing managers, who may act in ways detrimental to the owners’ interests (Tricker, 2015: 62). Under agency theory, the main role of the auditor is to monitor the actions of the management. The two models bring out the ambiguous position of the board of directors: do they act as the shareholders’ representatives in opposition to managers, or are they basically the same as the managers? The historical approach taken in this study suggests that there is no single model of corporate governance that applies across time.

The version of the business company model shown in Figure 2 assumes that all the members of the board of directors are employed as managers in the company. There is a subtle change in nomenclature in that ‘the company’ is no longer considered to be essentially the same as the members acting as a group but now is identified as the business itself. In practice, particularly for companies with a large number of shareholders and with stock exchange listings, boards would consist of some directors working actively in the day-to-day management of the company and other directors whose involvement with the company was simply to serve on the board. Nowadays, we would distinguish between executive and non-executive directors, but this terminology emerged only recently, and British company law still makes no distinction between the different types of director. Company promoters found that they could achieve greater success in floating the securities of a company on a stock exchange if at least some of the directors were regarded by investors as ‘safe pairs of hands’. This provided opportunities for a small group of individuals to earn good livings as ‘directors of companies’, more insultingly known as ‘guinea pigs’, ¹⁷ because directors’ fees were usually expressed in guineas (an archaic English coin worth £1 1s. or £1.05), and board meetings often finished with generous refreshments.

The wide variation in the quality of ‘guinea pigs’ can be seen by examining members of the British aristocracy who held multiple directorships. According to information provided by Cannadine (1990: 407), about a quarter of the entire nobility in 1896 held at least one company directorship. Some of these were directors of companies linked to their lands (e.g. local railway and canal companies and mining companies), others were recently ennobled industrialists, but there was a group of peers who held multiple directorships. Two individuals stand out: the Marquess of Tweeddale, with 19 directorships, and the Earl of Donoughmore, with 11. William Montagu Hay, the 10th Marquess of Tweeddale, was born a younger son, and so had to make his way in the world. He worked in the Indian Civil Service, and on his return to Britain in the 1860s, he became a Liberal member of parliament and also became involved on the boards of several companies. He was caricatured in the periodical Vanity Fair in 1874, with the title ‘The Director’, indicating the number of directorships he held at that time. He succeeded to the title in 1878 and continued to hold directorships (in 1896, he was director of 19 companies, including Chairman of the North British Railway – Cannadine, 1990: 717). At the same time, Tweeddale owned a vast estate in Scotland producing an annual income of over £25,000 (equivalent to roughly £5 million today).

If Tweeddale was an example of a highly respected ‘director of companies’, John Hely-Hutchinson, 5th Earl of Donoughmore, can only be regarded as a ‘guinea pig’. In 1896, Donoughmore was the director of 11 companies (Cannadine, 1990: 717), although he had no particular commercial talent. Donoughmore had extensive estates in Ireland, but in the late nineteenth century, such estates were often unprofitable, so Donoughmore would have needed the additional income provided by his directors’ fees to support what, from his caricature in Vanity Fair in 1879, appears to have been a comfortable, indeed, sybaritic lifestyle. Certain company promoters were notorious for their lists of potential ‘guinea pigs’, though other promoters tried to avoid them – Cannadine (1990: 410) quotes promoter William Weston:

Sir George Deadbroke, Bart., Lord Arthur Pauper, Viscount Damphule …, and others of that ilk, are always ready to lend the charm of their great names to these enterprises and attend board meetings, for moderate consideration of one guinea per meeting. ¹⁸

A particularly egregious case described by Cannadine (1990: 411) involved Cecil Rhodes and the British South Africa Company, which had been established to exploit lands in southern Africa, including what is now Zimbabwe (Power, 2017). Rhodes had been advised that the existing board of the company (mainly businessmen operating in South Africa) would not inspire confidence among British investors. Following this advice, Rhodes appointed the Duke of Abercorn (an impoverished Irish landowner) as chairman, at an annual salary of £2,000, and the Duke of Fife (who was married to the daughter of the Prince of Wales) as vice-chairman. These directors were later to be described as ‘worse than useless, for they gave a sheen of respectability to a company over which they had no control’ (quoted in Cannadine, 1990: 412).

By the opening years of the twentieth century, therefore, many of the problems that would subsequently be subsumed under the heading of ‘corporate governance’ were already in existence. Neither the collectivity model nor the business company model of governance represented a guarantee of sound management. This was also the case, of course, in public interest organisations, where good management was usually the result of the professionalism of salaried managers as much as the work of governing bodies. However, in public interest organisations, there was often more likelihood of problems emerging quickly, because of the active involvement of governors with a mission to advance the objects of the organisation rather than their personal interests. Organisations such as Christ’s Hospital, the Foundling Hospital and the Newcastle Infirmary had too many governors for issues to be concealed for long. However, particularly in the business company model, shareholders often found it difficult to gain detailed information about the companies in which they invested. They had to rely on a regular pattern of dividends to indicate financial soundness (and current dividends could be paid by less scrupulous corporate managers at the expense of future dividend-paying capacity) and on the names and reputations of the board of directors to indicate quality of management.

Because so many company directors came from upper echelons of society and were essentially amateurs, the requirements imposed on directors by company law were not onerous. In his seminal account of corporate governance, Tricker (1984: 40) summarises the three basic principles for directors’ responsibilities, which had been set out in the case Re City Equitable Fire Insurance Company Limited ([1925] Ch 407):

(a) A Subjective Test of Skill: A director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience.

(b) Periodical Attendance: He is not bound to give continuous attention to the affairs of the company. His duties are of an intermittent nature to be performed at periodical board meetings. He is not bound to attend all such meetings though he ought to whenever he reasonably can.

(c) Delegation to Executives: He is entitled to trust an official to perform such duties as can properly be entrusted to him in accordance with the Articles.

Not much was expected from the nineteenth- and early-twentieth-century company directors, and this was reflected in generally permissive attitudes towards corporate practice. Taylor (2013), in his study of how corporate fraud was treated (or often disregarded) by nineteenth-century criminal law, argues that the British criminal courts were ‘soft’ on company directors who had carried out what would now be regarded as fraudulent practices, such as appropriating corporate funds that had been committed to the directors as persons in positions of trust and authority. Criminal prosecutions were considered unnecessary because the loss of reputation or status suffered by directors involved in corporate collapses was regarded as sufficient punishment (Taylor, 2005). Shareholders preferred civil actions against directors, which offered the potential of financial recoveries, to criminal proceedings, where any financial penalties would accrue to the state. The conviction of directors of the City of Glasgow Bank in 1879 (Walker, 1998) appeared to usher in new ethical standards for company management, but judges in subsequent litigation downplayed this case as a potential precedent. Taylor (2013: 191) shows that the impact of greater regulation, such as the establishment of the role of Director of Public Prosecutions in 1880 and the Winding Up Act 1892, was not fully observed until the twentieth century.

One unhappy story was that of Gerard Lee Bevan, the chairman of the City Equitable Fire Insurance Company. Despite the company’s large and distinguished board, Bevan dominated the company’s policies and practices. Bevan was tried in 1922 (Vander Weyer, 2011: 217) under the Larceny Act 1861, ¹⁹ which made it an offence for a director of a public company to issue any statement in writing that was materially false with intention to deceive or defraud the investors. He was convicted for issuing false balance sheets and prospectuses (Taylor, 2013: 259–260). However, the other directors were not prosecuted, and in civil litigation against the directors and the company’s auditors, the courts set the requirements for directors at the rather low level quoted above.

The Larceny Act continued to underpin prosecutions in the twentieth century and was interpreted more expansively in the case of Lord Kylsant, the chairman of the Royal Mail Steam Packet Company, who was convicted for issuing a prospectus that was considered false because of what it omitted – that the company’s reported profits were the result of dividends received from subsidiaries and the release of tax provisions rather than successful trading – rather than what it explicitly stated (again, the other directors of the company did not face criminal prosecution). Taylor (2013: 262) asserts that the prosecutions in the twentieth century followed a path set by their nineteenth-century predecessors. However, the reluctance to prosecute ‘respectable’ British businessmen under the Larceny Act, noted by Taylor (2013), which provided little deterrence to those in control of companies, is reflected in modern models of corporate governance, which see governance as predominantly a private matter between directors and investors rather than a public concern justifying the use of the criminal law. In other countries, such as the United States, there is perhaps less reluctance to prosecute directors and senior managers of failing companies, though Fuerman (2004) cautions us against generalising from exceptional cases such as Enron.

Conclusion

In this article, we have examined some of the precursors of modern corporate governance, in a period when that term was unknown, and even the word ‘governance’ was used infrequently and in limited contexts. Much of the modern debate over good governance in the corporate sector homes in on board structures, and it is interesting to note how corporate boards were originally based on structures developed in public interest settings, such as town councils and merchant guilds. In early chartered companies, the most senior individual was usually known as the governor, who was supported by assistants and who had considerable power. The members of the body that ran a company were not referred to as directors until the late seventeenth century, but this rapidly became the standard nomenclature. In charitable corporations, the governors were often those who had given a certain financial contribution, and different structures developed to achieve effective day-to-day management, usually involving the employment of a salaried secretary or superintendent. By the nineteenth century, the ‘collectivity model’ of corporate governance, deriving from seventeenth- and eighteenth-century practices, became common and arguably (Napier, 1998) was the default structure assumed by British Company Law. However, by the end of the nineteenth century, corporate boards of companies with stock market quotations often consisted of various ‘managing directors’, employed by the company and not subject to periodic re-election, together with what would now be called non-executive directors, often put on boards because of the cachet of their names rather than because of their personal abilities.

Why should these changes have taken place, particularly in Britain during the nineteenth century? Classic historical studies of business organisation have suggested several factors: Chandler (1990) emphasises the increasing complexity of business, which required sophisticated management structures relying on professional managers, while Cottrell (1980) notes the growth of the stock exchange as a source of finance for expanding businesses, with wider shareholding and the separation of ownership from control leading to changes in expectations surrounding the role and duties of directors. Sometimes, specific corporate scandals brought out weaknesses in how companies were directed and managed: reference has already been made to the scandals involving Gerard Lee Bevan and Lord Kylsant in the 1920s/1930s, but earlier examples would include the South Sea Bubble in the early 1720s (Dale, 2004) and the ‘great railway swindle’ in the 1840s (Bryer, 1991), where boards of directors often acted to advance their personal interests at the expense of those of ‘the company’ (i.e. the shareholders collectively). Attempting to tease out the precise factors that led to particular changes in attitudes to corporate governance in different periods is a matter that would merit further research.

At the beginning of this article, we proposed a question: ‘Why do we use the term “corporate governance” rather than “corporate direction”’? We suggest that ‘corporate governance’ was intended to emphasise the ‘political’ nature of running companies. The view of companies as ‘little republics’, proposed by the mid-Victorian British politician Robert Lowe (see, for example, Loftus, 2009: 96), is consistent with the notion that directing and managing companies is a political process as much as, if not more than, a process of rational organisation, and hence should be considered through the originally ‘political’ notion of governance. This aspect of governance has arguably become lost in more recent considerations of corporate direction and management, which is normally seen through the theoretical economic lens of agency theory (and to a lesser extent other theories such as stewardship). By attending to the historical emergence of governance structures in business and not-for-profit organisations (even before this term was applied to companies), we can observe how the Governor of the early joint stock company gradually mutated into the Chairman of the Board of the modern business corporation. Further research, using business archives as well as past accounting records, is likely to provide further insights into how the past illuminates the present and helps to guide us towards the future.