We analyze the Second Law of black hole mechanics and the generalization of the holographic bound for general theories of gravity. We argue that both the possibility of defining a holographic bound and the existence of a Second Law seem to imply each other via the existence of a certain "c-function" (i.e. a never-decreasing function along outgoing null geodesic flow). We are able to define such a "c-function", that we call \tilde{C}, for general theories of gravity. It has the nontrivial property of being well defined on general spacelike surfaces, rather than just on a spatial cross-section of a black hole horizon. We argue that \tilde{C} is a suitable generalization of the notion of "area" in any extension of the holographic bound for general theories of gravity. Such a function is provided by an algorithm which is similar (although not identical) to that used by Iyer and Wald to define the entropy of a dynamical black hole. In a class of higher curvature gravity theories that we analyze in detail, we are able to prove the monotonicity of \tilde{C} if several physical requirements are satisfied. Apart from the usual ones, these include the cancellation of ghosts in the spectrum of the gravitational Lagrangian. Finally, we point out that our \tilde{C}-function, when evaluated on a black hole horizon, constitutes by itself an alternative candidate for defining the entropy of a dynamical black hole.