Corporate Governance and Theories The development of corporate governance is a global fact. Different countries have different theories of relevance and also depend on the stage of the economic condition in which the country is located, the corporate structure of the country and the groups of owners present. French corporate governance is another excellent example of the effectiveness of different strategies, Guillén points out. Consequently, its corporate governance structure is one in which the government, through banks, has influence over what happens in the company, and the automaker has a say in government affairs.
Despite increasing globalization, separate economies conduct corporate governance in different ways, ranging from the shareholder-centered Anglo-Saxon model found in the United States. The Code Committee believes that corporate culture is a driving force for the effectiveness of a company's corporate governance. Perhaps the clearest indicator of non-convergence, Guillén suggests, is the corporate control market. Many changes related to governance are anticipated, but the most striking change is the introduction of loyalty voting shares (after a 2-year holding period).
It analyzed six so-called empirical indicators to draw conclusions about global corporate governance in individual countries. In addition, the government will continue its top-down approach to improving corporate governance of publicly traded companies, emphasizing conflicts in family-controlled entities. Related research from the Corporate Governance Program includes The Elusive Quest for Global Governance Standards by Lucian Bebchuk and Assaf Hamdani. The challenge for investors will be how to assess corporate culture and identify potential risks given the available disclosure.
But does corporate governance work the same way in any economy? That has been a point of discussion between academics and economists. The new code places more emphasis on creating long-term value and introduces culture as an integral and explicit part of corporate governance. Not surprisingly, several corporate governance codes begin to place significant emphasis on culture. Corporate scandals, such as the alleged executive greed and accounting irregularities of energy giant Enron, have put corporate governance practices in the spotlight, illustrating the fundamental role they play in any economy.
