The paper “ Corporate Governance as a Matter for Shareholders, Not Governments” is a well-turned example of the literature review on management. In ensuring a useful corporate governance framework, it is important to consider the relevant and effective legal, regulatory, and institutional foundation upon which the market participants can depend on when establishing their individual contractual associations. The interest of shareholders needs to be considered as an obligation of corporate governance. This paper, therefore, discusses how corporate governance is a matter for shareholders but not the governments (Sarra, 2003). Corporate governance as a matter for shareholders, not governmentsCorporate governance is a term used to refer to policies and processes by which a corporation is managed and directed.
It particularly refers to the manner in which the power and accountability flow among shareholders, chief executive officers, boards of directors, and senior managers. The main governance structure for many corporations is that the shareholders vote for and empower the board of directors whose responsibilities are to look after the interests of shareholders. Corporate governance therefore should be a matter for shareholders, not governments.
Considering the interest of shareholders is vital in strengthening corporate governance (Macey, 2010). Macey (2010) argues that Weak rights for shareholders limit the shareholders’ ability to hold boards into account, especially in areas of payment and management of risk. Allowing shareholders to vote on remuneration report of compensation committee of the board is very essential in strengthening corporate governance. The practice was established as a nonbinding vote in the United Kingdom in the year 2002 and subsequently established by a huge number of European nations and by Australia. The effort of shareholders as of late promoted the implementation of a non-binding shareholder vote on executive compensation report in several huge companies.
The adoption is already a mandatory process for companies that receive finance under the troubled assets relief program (TARP) of the United States of America government.
Sarra P., J., 2003, Corporate governance in global capital markets, UBC Press: New York.
Edwards M., J. Halligan, B. Horrigan and G. Nicoll, 2010, Public Sector Governance In Australia, Dimensions of governance for the public sector unpublished book manuscript.
Macey R., J., 2010, Corporate Governance: Promises Kept, Promises Broken, Princeton University Press: New York.
Percy M., 2009, Broadbanding the nation: lessons from Canada or shortcomings in Australian federalism.
Parkin A. & Hardcastle, 2010, Government Business Relations, McGraw Hill, Melbourne.
Edwards, M. et al., 2010, Public Sector Governance, Rise of corporate and public governance In Australia, unpublished book manuscript.
Halligan J., 2010, Steering from the Centre: Central Government Offices and their Roles in Governing, University of Toronto Press.
Australian Public Service Commission (APSC). Building Better Governance. Contemporary Government Challenges.
Kodgruppen S., 2004, Swedish code of corporate governance: a proposal by the Code Group, Norstedts Juridik AB: New York.
Halligan J., & Wilks S., 2002, Reforming public and corporate governance: management and the market in Australia, Britain and Korea, Edward Elgar Publishing: New York.