Corporate Governance

12 Key excerpts on "Corporate Governance"

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  Corporate Governance in Nigeria

  Current Practices and Emerging Trends

  • Bello Marshall(Author)
  • 2020(Publication Date)
  • Malthouse Press

    (Publisher)

  13 To a large extent, these definitions view Corporate Governance as a mechanism which must ensure transparency, accountability and control. According to O’ Sullivan, Corporate Governance concerned with the institutions that influence how business corporations allocate resources 11 A. Cadbury, Report of the Committee on the Financial Aspects of Corporate Governance, (Gee: London, 1992). 12 OECD (Organisation for Economic Cooperation and Development) (2004) Available at www.oecd.org – assessed on 21 July, 2015. 13 B.J. Inyang, ‘Nurturing Corporate Governance System: The Emerging Trends in Nigeria’ (2009) 4(2), Journal ofBusiness Systems, Governance and Ethics, 1-13. Corporate Governance in Nigeria 32 and returns. She further added that Corporate Governance shapes who makes investments decisions in corporations, what type of investments are made, and how returns are distributed. 14 Overall, Corporate Governance describe all the influences affecting the institutional processes involved in organising the production and sales of goods and services. 15 Sun and others expanded the concept of Corporate Governance to mainly involve ‘four-level legal, cultural and institutional arrangements, including regulatory governance, market governance, stakeholder governance and internal or shareholder governance’. They further stressed that Corporate Governance ‘concerned with the regulation, supervision, or performance and conduct oversight of the corporation’. 16 Monks and Minow stressed that these inter-relationships must work in ways which ensure that the right questions are asked and that they get the right answers and that the aim must be to create sustainable value for the company. 17 Gillian maintained that generally, scholars considered Corporate Governance mechanisms as falling into one of two groups: those internal to firms and those external.

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  Corporate And Family Governance

  • Christos A. Christou(Author)
  • 2022(Publication Date)
  • Clink Street Publishing

    (Publisher)

  3

  Chapter 1: Corporate Governance

  1.1. Definition, importance and introduction of Corporate Governance

  What is Corporate Governance?

  The usual textbook definition of Corporate Governance refers to the prescription of rules of engagement between

  owners as providers of capital

  managers as executors of business strategy with owners’ capital and

  directors as formulators of strategy and supervisors of managers but answerable to owners

  Schematically, Corporate Governance is often presented as a set of bilateral relationships in a triangle linking owners, managers and directors.

  Figure 1.1.a. Traditional Corporate Governance Triangular Relationships

  4 This definition is clearly concerned with agency issues and is seen from the perspective of owners who may not always be involved in the business.

  Below the shareholder level, Corporate Governance also acts as an umbrella concept and focuses among other things on the interaction of planning, allocation and monitoring as illustrated below.

  Figure 1.1.b. Corporate Governance framework with Culture as a key ingredient

  In this broader definition, Corporate Governance pertains to structures, processes and culture for the direction and control

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  The Transnational Politics of Corporate Governance Regulation

  • Henk Overbeek, Bastiaan van Apeldoorn, Andreas Nölke(Authors)
  • 2007(Publication Date)
  • Taylor & Francis

    (Publisher)

  2 When referring to ‘governance’, rather than ‘Corporate Governance’ we obviously refer to the political science usage of the term, which comes close to how we will define regulation below, although emphasizing that one may govern without government (but also, through for example, private actors, see, for example, Hall and Biersteker 2002a). Whereas Corporate Governance refers to governance of the firm by relevant stakeholders within the firm, governance as a generic term refers to processes of collective choice taken beyond and above the (micro-level of the) firm. As such we might also speak of ‘the governance of Corporate Governance’. But as this sounds confusing we prefer the phrase ‘the regulation of Corporate Governance’ (see also the next section). In discussing shifts in Corporate Governance regulation we do, however, draw upon the political science literature on governance, distinguishing between different levels and arenas of governance.

  3 This definition is much broader, more ‘sociological’ (see Jackson 2001), than the conventional definition of the neoclassical agency theory (see also below), which focuses solely on the relation between the so-called principal (shareholders) and the so-called agent (management), and moreover assumes that the former, regardless of institutional arrangements and prevailing configurations of power, always has only one interest, which is, ‘to get the managers to give them back their money’ (Shleifer and Vishny 1996: 4). As we shall emphasize later on, ‘capital’, however, is not a homogenous category, but different types of owners may in fact have different identities and interests. Moreover, even if we also focus on the shareholdermanagement relationship, we refrain from treating labour acting as a direct stakeholder capable of exercising real control (for example, through the supervisory board) as an anomaly the way neoclassical agency theory does (by simply excluding it from its normatively-biased models). Our definition also deviates from some of the critical political economy literature on ‘financialization’, which tends to analyze Corporate Governance above all as a ‘narrative’, that is, a discursive practice situated moreover in a specifically Anglo-Saxon politico-economic context of the 1990s stock market boom (Erturk et al.

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  Corporate Governance and International Business

  Strategy, Performance and Institutional Change

  • R. Strange, G. Jackson, R. Strange, G. Jackson(Authors)
  • 2008(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  Corporate Governance has, until recently , not been a major topic for IB scholars. IB research focuses on the strategies of multinational enterprises (MNEs) for global expansion in diverse regions and countries. The emphasis here is on the corporate and business level strategies themselves, rather than the processes of strategic decision-making and hence Corporate Governance. However, we suggest that Corporate Governance and international business can be usefully linked in at least three ways. First, the Corporate Governance institutions in a particular country influence its attractiveness for interna- tional investment and may shape the form of that investment, such as FDI or Why Does Corporate Governance Matter? 3 portfolio investment. At a macro-level, the flow of international economic activity is strongly influenced by the legal rules, informal institutions and governance-related business practices across countries. Second, the power , influence and expertise of different stakeholders within corporate gover- nance have a strong influence on strategic decision-making, in general, and internationalization strategies, in particular. The institutions of Corporate Governance in a particular home country may influence its ability to relocate operations, or the pattern of competitive advantage of the firm. Host coun- try Corporate Governance institutions likewise pose a barrier to some types of business practices, such as due to differences in the protection of investors or the participation of employees in strategic decisions. Third, international- ization and the activities of MNEs impact Corporate Governance, by exposing firms to diverse sets of institutions and stakeholder pressures. Internation- alization may bring pressures from foreign investors for greater shareholder value or changes in regulation towards international standards.

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  Corporate Governance

  A practical guide for accountants

  • Catherine Turner(Author)
  • 2009(Publication Date)
  • CIMA Publishing

    (Publisher)

  Chapter 1. What is Corporate Governance?

  1.1. Definition

  The term ‘Corporate Governance’ has no single formal definition, and is often therefore used in a variety of differing ways (along with that other serial victim of flabby usage – ‘Best Practice’). Generally speaking, however, the term is used to describe a range of issues relating to the ways in which companies may be directed and controlled. It is, broadly, the systems and processes for ensuring proper accountability, probity and openness in the conduct of an organization's business.

  In some circles the term is also used to encompass wider issues relating to:

  ♦ the improvement of shareholders' performance; and ♦ other stakeholder arguments focused on addressing precisely whose interests a company, and its operators, ought properly to take into account.

  Stakeholders, of course, can include not only shareholders, but also customers, employees, retired employees (pensioners), suppliers, lenders and the wider community within which the company operates.

  1.2. Some key concepts encountered in the world of Corporate Governance

  1.2.1. Codes of governance

  In general, good Corporate Governance involves management judgement and is essentially voluntary in nature. However, there are a number of areas, as we shall see, where compliance is mandatory – either as a condition of continued membership of a particular body, or as a result of specific legislation. In Chapter 2 , we will look at some relevant codes, consider their origins, their status (mandatory or voluntary), and look at how some have been adapted for specific types of organization.

  1.2.2. Enlightened shareholder value

  This refers to a concept introduced under the Companies Act 2006. Section 172 of this act introduced the idea of ‘enlightened shareholder value’ into the duty to promote the success of the company for the members' benefit. It requires that a director act in the way which he believes, in good faith, to be most likely to promote the success of the company for the benefit of its members as a whole. In fulfilling this duty, he must have regard – inter alia – to:

  ♦ The likely long-term consequences of any decision; ♦ The interests of the company's employees; ♦ The need to foster the company's business relationships with suppliers, customers and other parties; ♦ The impact of the company's operations on the community and the environment;

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  Airline Governance

  The Right Direction

  • Victor Hughes(Author)
  • 2020(Publication Date)
  • Routledge

    (Publisher)

  1 Corporate Governance and how it works

  What ‘Corporate Governance’ means

  ‘Corporate Governance’ is a term which is frequently used in news reports and conversations, so it may seem strange to start this book with a discussion of what the term means. There are a lot of definitions of Corporate Governance, all of which seek to describe it clearly. There are many eminent authors of definitions for ‘Corporate Governance’, including The World Bank, Organization for Economic Cooperation and Development, various Institutes of Directors, academics and government committees (e.g., the United Kingdom’s Cadbury Committee).

  Producing one definition of Corporate Governance is difficult for two main reasons. Firstly, governing a company means people managing people, so it is a human activity and human beings are individuals and act and react in different ways. The second factor is that shareholders’ expectations of how a company should be managed are changing over time, frequently in response to some major commercial problem. In addition, society in general also has expectations of how companies should be managed and how interest groups are able to influence the thinking of governments on Corporate Governance. It follows that as the circumstances surrounding Corporate Governance are not fixed and there cannot be an absolutely complete, and etched in stone, final list of a director’s responsibilities. The best that can be produced is a list of what is currently accepted as being the responsibilities of directors. In such a fluid environment producing a definition (i.e., a clear complete statement of the meaning) for Corporate Governance, is difficult. For this book, the term ‘Corporate Governance’ will mean ‘the rules, laws, policies and practices which govern the operations of a company’.

  Directors and shareholders

  In a company the ownership and the operation of the company are separate. This separation is fundamental to the way in which most economies work in the world and arose from the landmark case of Salomon v. A Salomon & Co Ltd.

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  The Critique of Management

  Towards a Philosophy and Ethics of Business Management

  • Vincent Blok(Author)
  • 2021(Publication Date)
  • Routledge

    (Publisher)

  European Commission, 2010 ).

  Management as governance of the business operations can be seen as an instrument to enhance and secure corporate social responsibility (Aguinis and Glavas, 2012 ; Taneja et al., 2011 ; Jones, 2009 ; Kallio, 2007 ). There are various mechanisms of governance that can be deployed by the business manager, like integrating CSR objectives in strategy development (Melewar and Karaosmanoglu, 2006 ), the alignment of resource management (human resources, financial resources, etc.) and CSR objectives (Filatotchev et al., 2006 ), the embedding of CSR objectives in a shared vision and the core values that constitute the organizational culture of the firm (Uhlaner et al., 2007 ), the monitoring of responsible behaviour by the introduction of codes of conduct and accountability reports (Filatotchev et al., 2006 ), etc. (Roelofsen et al., 2015 ).

  The development of a broader perspective on the governance of the business operations beyond shareholder value corresponds with wider developments in society. Traditionally, a strict distinction was made between the role and function of political actors – governance by the state as creation and maintenance of the political order – and economic actors – Corporate Governance by business managers as creation and maintenance of the economic order. This distinction originates from Aristotle, who proposed a strict opposition between the private sphere of the household and the public sphere of the state (Aristotle, 1944 ).3 In the so-called network society, however, the monopoly of the state to produce social regulation and judicial norms is no longer self-evident.4 It is increasingly replaced by a more complex network of non-state actors (firms, NGOs, etc.), which are themselves loci of political activity (Castells, 2000

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  The Corporation

  Growth, Diversification and Mergers

  • Dennis Mueller(Author)
  • 2020(Publication Date)
  • Taylor & Francis

    (Publisher)

  6 Corporate Governance

  In recent years, considerable attention has been devoted to differences across countries in the institutional environments in which corporations operate, and the consequences of these institutional differences for corporate performance. One branch of this literature has been concerned with Corporate Governance structures.1 Under the broad heading of Corporate Governance are usually included (1) the identity and degree of concentration of ownership, (2) the institutional structure by which owners monitor and control managers by means of boards of directors and the like, and (3) the institutional structure for disciplining and replacing managers as, for example, through proxy contests and/or takeovers. A second branch of the literature focuses upon the broader legal environment in which corporations operate. Within this literature would come laws governing a shareholder’s access to various sorts of information about a company, a shareholder’s rights to sue the management for certain actions detrimental to the shareholder’s interests, and so on.2 Although Corporate Governance structures are imbedded within the broader legal system of a country and thus are affected by it, the two sets of institutions are not synonymous, as we shall explain shortly.

  One distinction drawn within the Corporate Governance literature is between “insider” governance systems in which ownership stakes are concentrated and the major stakeholders are directly represented on the boards that monitor managers, and perhaps in management itself, and “outsider” governance systems in which ownership stakes are dispersed, and owners exercise indirect control on management by electing representatives to the monitoring boards, or perhaps by voting on specific proposals of management. The United States and Great Britain are the most important examples of countries with outsider governance systems, and thus this form of governance structure is often called the “Anglo-Saxon” system.

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  The Corporation

  Growth, Diversification and Mergers

  • Dennis Mueller(Author)
  • 2003(Publication Date)
  • Taylor & Francis

    (Publisher)

  6: Corporate Governance

  In recent years, considerable attention has been devoted to differences across countries in the institutional environments in which corporations operate, and the consequences of these institutional differences for corporate performance. One branch of this literature has been concerned with Corporate Governance structures.1

  Under the broad heading of Corporate Governance are usually included (1) the identity and degree of concentration of ownership, (2) the institutional structure by which owners monitor and control managers by means of boards of directors and the like, and (3) the institutional structure for disciplining and replacing managers as, for example, through proxy contests and/or takeovers. A second branch of the literature focuses upon the broader legal environment in which corporations operate. Within this literature would come laws governing a shareholder’s access to various sorts of information about a company, a shareholder’s rights to sue the management for certain actions detrimental to the shareholder’s interests, and so on.2 Although Corporate Governance structures are imbedded within the broader legal system of a country and thus are affected by it, the two sets of institutions are not synonymous, as we shall explain shortly.

  One distinction drawn within the Corporate Governance literature is between “insider” governance systems in which ownership stakes are concentrated and the major stakeholders are directly represented on the boards that monitor managers, and perhaps in management itself, and “outsider” governance systems in which ownership stakes are dispersed, and owners exercise indirect control on management by electing representatives to the monitoring boards, or perhaps by voting on specific proposals of management. The United States and Great Britain are the most important examples of countries with outsider governance systems, and thus this form of governance structure is often called the “Anglo-Saxon” system.

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  The Globalisation of Corporate Governance

  The Challenge of Clashing Cultures

  • Adrian Davies(Author)
  • 2016(Publication Date)
  • Routledge

    (Publisher)

  The EU has proposed a White Paper on European Governance (2002), which is an open consultation document. It recognises widespread disillusionment in Europe with the European Union and its structures, which has emerged strongly with the failure to agree the terms of a constitution for Europe. The aim of the White Paper is to create a consensus for action to engage citizens in the process of developing Europe, in order to foster ownership of, and belief in, the results.

  Corporate Governance is also seeking to operate globally. The process is spearheaded by the International Corporate Governance Network (ICGN), a not-for-profit company, with the following purposes: • to provide an investor-led network for the exchange of views and information about Corporate Governance issues internationally; • to examine corporate government principles and practices; • to develop and encourage adherence to Corporate Governance standards and guidelines; • to generally promote good Corporate Governance.

  ICGN has worldwide membership and several working committees developing policy on key issues of Corporate Governance. There is also an encyclopaedia about international Corporate Governance, ‘Enercogov.com’ , which covers both general topics and specific issues, such as decision systems, monitoring systems, remuneration systems, etc. International Corporate Governance has its own monthly newsletter, ‘Governance’, which publishes researched articles and organises conferences.

  We have examined progress in Corporate Governance in a wide range of countries in Chapter 2 . This shows considerable disparity in approach and performance, and it is to be hoped that the process of globalisation will help to raise the overall performance, not least in order to allow countries to compete successfully for investment and markets.

  The Environment

  One key factor which all nations and all individuals share is the natural environment. Our survival depends on clean water, fresh air and a climate which allows us to grow food. As the human population rises to 7 billion in a fixed space, pressure on the environment increases. With growing expectations at all levels of society, and increasing awareness of the lifestyle of the richest few, demands for consumption are adding to the other pressures on the environment and creating stresses which will progressively affect everybody. It is this process which is driven by globalisation, involves everybody and will be disastrous for all unless it can be managed globally.

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  The Political Economy of the Company

  • John Parkinson, Gavin Kelly, Andrew Gamble, John Parkinson, Gavin Kelly, Andrew Gamble(Authors)
  • 2001(Publication Date)
  • Hart Publishing

    (Publisher)

  48 It did not take long for a consensus to emerge that the scope for legislative involvement was limited. Government could, however, influence Corporate Governance by indirect means, through example in its own position as share-holder. By the mid-1960s, government had become by default as well as design a significant shareholder in many industries. 49 Responsibility for government Corporate Governance in a Political Climate 191 44 Submission from the Registrar of Companies, Company Law Committee, Oral Evidence, (BT 147/52, Public Record Office, Kew, 29 March 1960). 45 File note on company law reform, Company Law Reform (EW 27/4, 7 April 1965). 46 File note on company law reform, ibid . 47 File note of meeting held on 7 December 1966, Inquiry into the Functions, above n. 41. 48 Note of 2 December 1966, ibid . 49 The Treasury, for example, was the holding company for shares in inter alia British Petroleum, Cable and Wireless, Suez Finance, British Sugar Corporation, and Cunard, whilst the Board of Trade was the holding company for Fairfields (Glasgow), the Ministry of Aviation for S.B. (Realisations) Ltd, the Ministry of Power for Itaira Iron Ore Co: Government Holdings in Public Companies, Responsibility for Government Shareholding Correspondence (EW27/236). shareholdings was widely spread among different departments. In most cases the shareholder was the sponsor department for the industry concerned. But government had two distinct interests as a shareholder in a private firm: in the general welfare of the industry to which the firm belonged and in the perfor-mance of the firm itself. The first was termed the “industrial” and the second the “proprietorial” or “shareholder” interest, concerned largely with return on capital. 50 Problems arose if the two interests conflicted, for example, “over the question of whether profits should be ploughed back or distributed”.

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  Principles of Contemporary Corporate Governance

  • Jean Jacques Du Plessis, Anil Hargovan, Mirko Bagaric, Jason Harris(Authors)
  • 2014(Publication Date)
  • Cambridge University Press

    (Publisher)

  As far as Japan is concerned, corporate law and practice have long attracted considerable attention from foreign commentators. Much of the commentary increas- ingly refers to ‘Corporate Governance’, reflecting the emergence of this broader term worldwide since the 1980s (outlined in Chapter 1). Contemporary corporate law analyses and discussions focused on Japan have long tended to adopt a broader perspective. This reflects an awareness of the pervasive but typically informal role of stakeholders other than shareholders, especially core ‘lifelong’ employees, ‘main banks’ and ‘keiretsu’ corporate groups, in firms. The two important and quite distinc- tive monitoring mechanisms in Japanese Corporate Governance also remind us that The EU, Germany, Japan, China and Indonesia 509 government policy and the vicissitudes of politics are as important as economics and the broader social or cultural context in explaining and predicting trajectories. This is particularly evident from the amendments to the Companies Act passed in June 2014. Gradual transformation seems to be underway at the same time as more significant changes in the relationship between shareholders and directors or managers. Corporate law and Corporate Governance in China have been influenced by a variety of factors: the traditional dominance of the state-owned sector and the con- tinuing ideological commitment by policy-makers to the ‘socialist market economy’; the decision by the government to attract foreign capital by encouraging the establish- ment of foreign-invested companies and, more recently, the rapid growth of the Chinese private sector. The amendment of the Company Law and the Securities Law in 2005, together with the introduction by the China Securities Regulatory Commission of Corporate Governance requirements, are highlights in corporate law and Corporate Governance developments in China.

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