Corporate Governance: A review of Literature
What is Corporate Governance?
Principles of Corporate Governance
Theoretical foundations of corporate governance
Agency theory
Stewardship theory
Stakeholder theory
Post-Enron theories
Corporate Governance: The changing trends
Recent developments on regulatory front and research
Corporate Governance: Relationship with market indicators
Venture Capital Model: Impact on Corporate Governance
Appendix I- Examples of Corporate Governing bodies
This paper is a review of pertinent literature on corporate governance. Corporate governance addresses the control issues created due to the separation of ownership and management of a corporation.It is generally considered as the means by which shareholders control the board of directors.Corporate governance maintains relationships between board of director, stakeholders and shareholders. Every relationship has high significance and multi-faceted aspects. OECD considers corporate governance as a framework dealing with the problems resulting from the separation of ownership and control of a corporation. Precisely stating, Du Plessis, et al. (2010) defines corporate governance as the system of regulating and overseeing corporate conduct and of balancing the interests of all internal stakeholders and other parties (external stakeholders, governments, and local communities) who can be affected by the corporation's conduct. This literature review paper adopts a throughput investigative approach whereby literature has been reviewed that describes different facets and elements of corporate governance. After reviewing academic literature on background and principles of corporate governance, literature pertaining to the theoretical foundation of CG has been reviewed. Agency theory, stewardship theory, and stakeholder theory have been identified as theoretical foundations of CG whereas contemporary theories of CG have emerged after the corporate scandal of Enron and WorldCom. Contemporary trends in the conduct and structuring of CG have also been reviewed. Venture Capital (VC) model of financing has been found to have significant positive influence on start-up companies in the U.S. CEO, Board of Directors (BOA), and shareholders are identified as the main actors of corporate governance structures. Sarbanes-Oxley (SOX) Act 2002 required significant changes in management, board structure, accounting practices, financial reporting standards, and audit protocols for large sized private and public firms.
Corporate Governance: A review of Literature
I- Introduction
In the backdrop of global financial crisis (GFC) in 2008, the debate on structure and formation of corporate governance has intensified. Corporate governance is a relatively new term that emerged during 1980s and 1990s but now it has developed into a well-known idea mainly because of two factors i.e. curious happening in corporate world and global mobile capital flows (Joshi, 2004). Since its emergence, the term corporate governance has been defined differently under different perspectives. In this regard, a simple way to describe the meaning of term is "putting morality into capitalism"(Martin, 2006).In this regard, corporate governance is perceived as an anti-greed regulatory framework. However, it is generally considered as the means by which shareholders control the board of directors (Lenoble, 2003). This perspective follows the classic principal-agent theoretical foundations. In a more clear way, it addresses the control issues created due to the separation of ownership and management of a corporation.
This research paper is divided into six broad sections, each dealing with particular but coherent aspect of corporate governance literature. Section I introduce the topic of the study and describe the composition of report. Part II includes background and principles of corporate governance as a scholarly subject. Part III will review literature on theoretical foundations of corporate governance. Part IV reviews pertinent literature on the topic of changing trends observed in corporate governance of firms. Part V and VI highlight the relationship of corporate governance with market indicators of a firm's performance and impact of venture capitalist financing model on firm's corporate governance. At the end, part VII of the paper concludes the paper by describing most consistent themes found in the literature review.
II- Background
Researchers try to investigate the real cause of 2008 like bust in financial markets. Some term it sheer negligence and risk taking propensity of financial institutions whereas other have pointed towards deep cultural and organizational issues responsible for creating such crisis. The role of management and Chief executive Office from firm's side and the role of financial regulating agencies from government's perspective have gained much importance. To review pertinent literature on the nature and role of corporate governance, following is the broad structure of this paper.Many other factors influence the corporate governance in firms. These factors include employees, customers, suppliers, creditor and community where the firm is located. Corporate governance maintains relationships between board of director, stakeholders and shareholders. Every relationship has high...
Reliability & Validity The key will be to find reliability and validity. Reliability, of course, is the concept that if someone else does the same exact research in the same exact way, the research conclusions drawn will be close to if not entirely identical. Validity is similar in that the conclusions met have to be directly applied and ascertained based on the data that actually exists and not based on the
Corporate Governance Two different, yet related corporate governance definitions have been presented in this paper (Mallin, 2006: 3). Sometimes they cause confusions and controversy and ultimately affect the implementation of tightening of governance (Windsor, 2009). The 1992 Cadbury Report, which presented the major proposals for tightening governance, described governance as the system through which firms are managed, regulated and supervised (Cadbury, 1992: 15). The fundamental agency idea emphasizes that corporate governance has
Additionally, it has been observed that whenever companies implement strategies of CSR, they do this not out of individual choice and desire, but as a result of imposed legislations. "All of these decisions are made under the mandatory legal rules embodied in employment and labor law, workplace safety law, environmental law, consumer protection law, and pension law. Such rules, because they often apply to all businesses, are not susceptible to
It should not be treated as a separate exercise undertaken to meet regulatory requirements." (ICA, 29) Here is expressed a philosophical impetus that drives the focus of this research, that such compliance which will generally concern matters such as corporate accounting, the practice of internal oversight and the practice of financial transaction must be considered inextricable from other aspects of practical, procedural and legal operation in terms of its
Corporate Governance As some queries about corporate governance were there ever since 1932 - the period of Berle and Means, the expression of the concept of Corporate Governance was not found in English vocabulary until 25 years ago. However, in the previous two decades, matters relating to corporate governance have gained importance in academic literature as well as in public policy deliberations. Corporate governance came to be acknowledged as being synonymous
Corporate Social Responsibility Literature Review a topic-Corporate Social Responsibility The term 'corporate social responsibility' is a social word that has often taken the world by a storm at its mention. Noya and Clarence (2007) in their book "The social economy: building inclusive economies" offers a succinct description and understanding of what normally takes place and get exemplified at the mention of this term in the business world. Many writers of business journals
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