Companies are now living with a level of scrutiny that most of them couldn’t have imagined at the decade’s start. Heightened regulatory supervision in the wake of so many high-profile corporate scandals is one aspect of this newly intensified attention, which goes way beyond efforts to determine whether companies are merely complying with regulations. The momentum for change is gathering pace; more and more, corporate leaders are living in a goldfish bowl.

Today, 50 countries have their own corporate-governance codes. There may be no legal requirement to abide by them, but many are founded on the principle of "comply or explain": a company that doesn’t comply must explain itself, offering rich pickings for a watchful media.

The attentive gaze of the governance-rating services, which aim to assess the governance practices of the companies they follow, adds to the goldfish bowl effect. Their activities, as some observers see it, amount to no more than superficial box-checking that will have little clout with investors. But the fact that debt-rating agencies such as Standard & Poor’s are developing these services suggests that the opinions of at least some of them will become authoritative.

And then there are the shareholder activists, whose concerns increasingly go beyond a narrow definition of corporate governance. Is the board functioning well? Are management’s financial and strategic decisions maximizing shareholder value? Companies that consistently fall short of their shareholders’ expectations can expect, more and more frequently, to deal with the activists.

Another aspect of the new scrutiny concerns consumers, customers, employees, and pressure groups, all of which want companies to account for their impact on society. Adding to the burden are an array of multinational codes of practice (such as the UN’s Global Compact), which define corporate responsibilities in areas such as human rights and the labor market. Knowing how to respond to these demands is as legitimate a corporate-governance issue as the composition of the board.

This issue of The McKinsey Quarterly seeks to help companies live with this novel degree of scrutiny. "A new era in corporate governance" urges US boards to respond to investors’ demands for more reform—in particular, by splitting the roles of chairman and CEO, making directors more accountable, and reducing executive compensation. "Asia’s governance challenge" warns the region’s developing countries against mimicking best practice as laid down in the West. What Asia needs are the foundations of good governance: efficient judicial systems, developed capital markets, long-term institutional investors, and regulatory enforcement. In the interview "Agenda of a shareholder activist," David Pitt-Watson, the managing director of Hermes Focus Asset Management, explains what a leading shareholder-activist fund expects from companies, and why.

Companies won’t respond to the scrutiny in the same way, but two things are certain. First, a rapid blitz to fix governance problems before returning to management as usual won’t pass muster; today the ability to explain all manner of corporate decisions is the very stuff of normal management. Second, management and boards must explain themselves by embracing a set of corporate values that guide them in the conduct of business and clarify the logic underpinning their decisions. Too often companies attempt to use different messages to assuage the concerns of different audiences. But today any hint of inconsistency will be exposed. Companies must not only communicate a resolute sense of purpose that acknowledges the demands made on them by the capital markets but also simultaneously respond to the concerns of all other legitimate constituencies with which they interact. They might not always satisfy everyone, but transparency and consistency will at least help them gain trust.