Corporate Governance - Case Study Example

Corporate Governance Apart from the three internal governance mechanisms- ownership concentration, boards of directors,and executive compensation- the capital structure would help support the welfare of managerial agents with those of the owners of the firm. According to Hitt, Ireland & Hoskisson, the capital structure helps in maximizing the wealth of the existing shareholders as well as maintain a viable fiscal performance (97). In the course of deciding on capital structure and the cost of capital, the implications of the rating agencies need to be assessed as they have a major impact on the decisions taken by the shareholders.

Long term capital structures have been indicated to more advantages to the firm over short-term capital structure decisions (Hitt, Ireland & Hoskisson 97). Matters of equity and debt can also be well analyzed through the capital structure. Evidently, the capital structure would help prove useful in sustaining the interests of managerial agents and the firm owners. U.S.-based firms could integrate elements of the corporate governance practices to make better decisions by coming up with policies that will help their firms gain public trust.

Additionally, US firms can improve the ethics of the firm, corporate governance and social responsibility (Hitt, Ireland & Hoskisson 317-23). In the event that the mangers are compelled to comply with the set regulations, then the level of ethics will be adhered to across the board. Having a strict code of conduct will allow for compliance of set standards and regulations. This means that all the decisions made will be done ethically. Work CitedHitt, Michael., Ireland, Duane & Hoskisson, Robert.

Strategic Management: Concepts and Cases: Competitiveness and Globalization. London: Cengage Learning.2012. Print.