The OECD is the international standard setter on corporate governance. Notably, the Committee on Corporate Governance adopted the Principles on Corporate Governance at the end of the 1990s and updated them in 2004 after a wave of financial crises around the world.

A fundamental policy objective of corporate governance is to stimulate entrepreneurship and innovation in corporations. This chapter considers the role of corporate governance rules and regulations in promoting the competitiveness and innovative capacity of listed companies. Based on a research that examines the correlation between corporate governance structures and innovation in listed companies, the chapter analyses the development of an innovative business ecosystem where companies make themselves adaptable to smart regulations. It pays particular attention to board structure and role in promoting entrepreneurship and innovation in listed companies.

Corporate debt and equity are two main forms of financing that give companies an opportunity to access external capital they need for investment and growth. This chapter examines the European corporate funding market and highlighs the needs for capital in refinancing maturing loans in the coming years and the possible impacts of Basel III on banks' capital needs. The chapter discusses the need for non-bank debt funding and loan contracting considering banks would have a decreasing share in corporate funding in Europe and equity markets would not be able to bridge this gap. It also addresses the corporate governance aspects of debt contracts which have the potential to exert positive influence on the management of a company for value creation.

This chapter examines the structural differences among countries, industries and firms in terms of the role of corporate governance in economic growth, entrepreneurship, innovation and value creation. It also discusses the fundamental changes in both financial and corporate sectors, particularly high frequency trading, short-termism in equity investment and corporate investment plans. Three main potential risks of excessively prescriptive codes are pointed out; problem of identification, unintended consequences of rules and homogeneity that exacerbates systemic risks. The chapter concludes with recommendations to develop policies to promote the appropriate balance between contractual freedom and market protection.