corporate governance
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STUDIES ON CORPORATE GOVERNANCE HAVE GAINED momentum with the reported
misconduct of Enron and Worldcom on accounting practices. Back in 1999,
corporate governance gained prominence as attested by the Organisation of
Economic Cooperation and Development's (OECD) definition of corporate
governance as the `set of relationships between the company's management,
its board, its shareholders and other stakeholders.'
In the same year, World Bank indicated the purpose of corporate
governance is to create `fairness, transparency and accountability' to all
stakeholders. It is only when the world was shocked by the Enron scandal
that corporate governance was put into high gear, and now with punitive
policy measures.
There seems to be a contrast as to how the Americans and the Europeans
look at the issue. The former uses the Anglo-Saxon model where corporate
governance has the aim of maximising profits, that is, maximise
shareholder value and nothing else is more important. This is the
shareholder value-centred view of corporate governance. It is based on
agency relationship between the shareholders and the manager with the
protection of shareholders' interests as the main objective.
The opposing European version as typified by the Franco-German model
aims to protect a wider circle of stakeholders, incorporating each
stakeholder's claims, rights and obligations. Stakeholders may include
customers, suppliers, providers of complementary services and products,
distributors, and employees...