Corporate Governance And Its Impact On Business Governance

2028 Words Jan 21st, 2015 9 Pages
Corporate governance is an increasingly important topic in this age of globalisation, it is a global occurrence which in turn makes the subject complex, with issues of ownership, cultural, legal and other structural differences being involved. From this broad scope, it is discernible that the functions of the board are inseparable from the topic of corporate governance and in turn what effect these have and will potentially have on the share price in the future.

As with every other aspect of globalisation, its development is not necessarily even across all spheres; “thus some theories may be more appropriate and relevant to some countries than others...” (Mallin 2010, p. 13). In making any assertions on the impact of corporate governance, an aspect of importance is the identification of whether the corporation operates “within a shareholder framework, focusing primarily on the maintenance or enhancement of shareholder value as its main objective, or whether it takes a broader shareholder approach, emphasizing the interests of diverse groups such as employees, providers of credit, suppliers, customers and the local community.” (Mallin, ibid)
Corporate governance is broadly classified into two main systems: outsider based systems and insider based systems, with the Anglo – American models which exist in states like Australia and New Zealand in the first category, while Japan, Germany and other Western European Systems fall in the latter.(Mayer 1994) The outsider – based…
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