Does Stakeholder Theory Provide A Better Basis For The Development Of Corporate Governance In The 21st Century Than Agency Theory? Insert Name Insert Grade Course Insert Submission Date Stakeholder and Agency Theory Introduction and Background Organizations tend to look for means of constant improvement of their functions and operations to enable them achieve their set objectives in the current dynamic business environment…
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It is important to understand the meaning of corporate governance to be able to fully discuss its features. Even though there are different variables that come into play because of the different operating environments in different nations, corporate governance may refer to that process that leads to effective control, direction and accountability in organizations. As a result, corporate governance involves elements like control, co-ordination, direction and the checks and balances associated with management of organizations. In addition to the definition of the term corporate governance, it is equally important to point out that the practice has evolved over the years to become a more complex but essential feature for the success of contemporary organizations. The concept of corporate governance has been fast adopted in various parts of the world but with some major variations because of the different circumstantial variations of nations (Clarke 2004). Consequently, there have been different frameworks of corporate governance that have emerged as a result of this. However, there are two main approaches of corporate governance that can be identified. ...
at had a tradition of common law like Australia, United Kingdom, USA, Canada and New Zealand developed corporate governance structures that focused on shareholders’ returns or interests. In their case, corporate governance was supposed to ensure that corporations achieved the objectives set by their owners. Consequently, the two main corporate governance approaches have been termed as insider and outsider approaches respectively. Having reviewed the background of corporate governance it is therefore important that the theories of corporate governance that have been put forth be discussed. Theories of Corporate Governance There are two theories of corporate governance that have been proposed by scholars and of which will form a basis for this discussion. They include the stakeholder theory and the agency theory as discussed below. The Stakeholder Theory Also referred to as the stewardship theory, the theory proposed by Freeman is based on the argument that organizations have a wider obligation of serving the general interests rather than just attaining the capitalistic goal of wealth maximization (Mulili and Wong 2011). The theory holds that firms are socially responsible to all parties that interact with it or those that are affected by the firms’ quest on achieving its set objectives (Freeman et al 2010). As a result, corporate are said to be socially responsible to their stakeholders, that is, the suppliers, employees, clients, shareholders, interest groups and the government among other industry actors they are directly or indirectly involved with. It has been noted that stakeholders are important to corporations because the manner in which they are handled determines their feedback (Gregg 2001). For instance, when they get more in terms of value or extra ...
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This research aims to evaluate and present the concept of Corporate Governance and the main principles for UK Corporate Governance Code such as leadership, effectiveness, accountability, remuneration and relations with shareholders.For the purpose of this research work the two UK listed Companies that will be analyzed are Carillion Plc and Deutsche Bank.
The CEO represents a management not a board. However, the board is represented by a chairman, who is authorised to oversight the management and make certain strategic decisions about a company. Corporate governance is defined as how the companies are controlled and directed.
As a result, it felt necessary to provide some rules and advice in various areas of company management. Cadbury Report (1992) Greenbury Report (1995), Hampel Report (1998). Turnbull Report (1999) and Higgs Review (2003) were issued to address some specific corporate objectives.
e maximisation of shareholder value.”3 The corporate sectors of the US and UK are typified by a comparatively huge number of ‘quoted, a liquid capital market where ownership and control rights are traded frequently, and few inter-corporate equity holdings.’4 On the contrary, Japan’s and Germany’s corporate sectors are typified by a comparatively few ‘quoted companies, an illiquid capital market where ownership and control rights are traded infrequently, and many inter-corporate shareholdings.’5 Therefore, the corporate sectors of the US and UK have ‘outsider’ corporate governance system, whereas the corporate governance systems of Japan and Germany are ‘insider’ ones.6 T
An attractive theme of corporate governance is its mechanisms that try to avoid the principal-agent problem. In recent years, especially after the collapse of American corporate giants like Enron, WorldCom, and Parmalat, organisations have been vehemently working to improve their corporate governance.
Discuss one way in which you would improve the current scenario in regard to corporate governance. Introduction The corporate world is full of stories and events- some good and some bad, some which make the news and some which never see the light of day. Competition, personal greed, pressure from stakeholders and other sources are some reasons why business managers, owners and CEOs indulge in bad and unethical business practices like embezzlement and misappropriation of funds, false accounting records, misleading valuations of assets and liabilities and a whole lot of other things that bring a bad reputation to themselves and the companies they represent.
United States, China, and OECD countries, particularly Canada, in order to substantiate the argument that “regardless of what form of regulation, principles or prescription, the main aim of corporate governance should be the maximisation of shareholder value.”3
nance codes were developed on the basis of the Cadbury report and the Greenbury report during 1990’s and early 2000’s, these codes were not sufficient to prevent banking crisis in the UK. Therefore, it can be inferred that failure of corporate governance policies of banking
ensation policies for the top level executives of the company, managers will feel motivated consequently, making them remain committed to the implementation of the company’s strategies (Hitt, Ireland & Hoskisson, 2012). Moreover, by allowing independent audits of financial
The managers have full information about the company and the mangers focuses on the short term goal rather than long term goals of the organization.
The main purpose of reducing the agency theory is that the theory states that
9 Pages(2250 words)Coursework
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