Essays on Corporate Governance Has Become an Important Issue Both for Policy Makers and Academics Case Study

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The paper "Corporate Governance Has Become an Important Issue Both for Policy Makers and Academics" is an outstanding example of a business case study.   Corporate governance  has been defined as a process wherein policy decisions and choices relevant to law, and institutions have an impact on the manner in which policy decisions are formulated and implemented within a given corporation (Monks and Minow, 2004). This would, therefore, mean that corporate governance would take into account the micro and macro environment within which a given company is administered and managed. Corporate governance  is also inclusive of the association between the shareholders  included and the objectives keeping which in mind the corporation is managed. The members involved in the process of corporate governance are shareholders and the decision-makers in the management of the company, the  board of directors.

The process of corporate governance would also, therefore, include labor  (employees), customers, creditors (e. g., banks, bondholders), suppliers, regulators, and the community at large. Corporate governance is a multi-faceted subject. One of the most pivotal aspects that underlies the concept of corporate governance is that the process ensures a certain sense of accountability  that would belie an effort on the part of certain members of the company targeted towards the reduction or elimination of the  principal-agent problem. A related but separate thread of discussions focuses on the impact of a corporate governance system in  economic efficiency, with a strong emphasis on shareholders' welfare (Wei, 2004).

There are yet other aspects to the corporate governance subject, such as the  stakeholder view  and the corporate governance models around the world. There has been renewed interest in the corporate governance practices of modern corporations since 2001, particularly due to the high-profile collapses of a number of large U. S.

firms such as  Enron Corporation  and  MCI Inc.   (formerly WorldCom). In 2002, the U. S. federal government passed the  Sarbanes-Oxley Act, intending to restore public confidence in corporate governance. Corporate governance guidelines and codes of best practice arise in the context of and are affected by, differing societal values. Although boards of Directors provide an important internal mechanism for holding the management accountable, effective corporate governance is supported by and dependant on the market for corporate control, securities regulation, company law, accounting and auditing standards and judicial enforcement among other things.

There are some governance codes that are linked to the listings and disclosure requirements. There are others that are purely voluntary in nature but may be designed to help forestall further government or listing body regulation. Over the past decade and half the codes of corporate governance have had many sources like stock exchanges, corporations, institutional investors and associations o directors and corporate managers. Law does generally not mandate compliance with these governance recommendations, although the codes linked to stock exchanged might have a coercive effect. In developing nations, on the other hand, both voluntary and guidelines and more coercive codes of best practices have been issued as well. Anglo-Saxon Model of corporate governance: The liberal model is followed mostly in Anglo-American countries.

More often than not the model being followed is determined by the level of liberal capitalist culture acceptation in a given country. The Anglo-Saxon model then keeping with the traditions o capitalism provides priority to the shareholders’ stakes. The model is also known as the liberal model of corporate governance. This model lays stress on sweeping modernization and cost competition.

The idea, therefore, is to create an organization where the culture of decision making is centralized within the hands of the cent5ral management leadership. A company would, therefore, be managed by a board of directors which in turn makes a choice of a chief executive officer or the CEO entrusted with sweeping authorities of management of the corporation on a daily basis. Decisions on policy-setting, decision-making, monitoring management's performance, or corporate control are the domain of the board and the employees are just salaried people who do their job and have no role to play in the actual management decision making.



Hovey M and T Naughton, 2007, A Survey of Enterprise Reforms in China: The Way Forward, pub, Economic Systems, Vol.31 No.2, pp138-156

Shleifer A. and RW Vishny, 1997, A Survey of Corporate Governance, pub, Journal of Finance, Vol.52 No.2, pp737-783

Corporate Governance, accessed October 7, 2009, <>

Monks R A and Minoe N, 2004, Corporate Governance, pub, Wiley Books, pp195-202

Wei Y, 2004, Comparative corporate governance: a Chinese perspective, pub, Kluwer Law International, pp202-225

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