Essay on Corporate Governance

2855 Words 12 Pages
Corporate Governance

" Corporate governance - ten years ago the phrase was not used, today it is commonplace. The work of company directors is in the spotlight. The issues are legion: How to improve corporate performance and strategies, how to ensure corporate conformance through executive supervision and accountability, the role of outside directors, audit committees, chairman and CEO, directors' remuneration, German two-tier boards, Japanese boards, institutional, investor power….. "

(Corporate Governance, Bob Tricker, 1984)

The term 'corporate governance', in recent years has been used in a number or contexts, particularly in relation to that of boards of companies listed on the
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But many countries regard a better corporate governance practices as a way to improve economic dynamism and therefore enhance overall economic performance.

Corporate governance issues probably came to the fore in the early 1980's in the United States during the heyday of the corporate take-over activity. Perceiving little support from their institutional shareholders, numerous US Company boards started to initiate protective practices to deter any undesirable take-over bids. While occasionally effective in their primary goal, these measures were seen by some shareholders, especially public pension funds, as acting against their best interests. Subsequently, these shareholders began to take a greater interest in their investments.

Legal commitments forced upon US corporate pension funds to 'manage their assets' hastened this process. Out of this, Corporate governance was inevitably born.

Corporate governance is set in the framework and attitudes of political and social history in the UK. The nineteenth century in the UK saw mostly sole-traders and partnerships emerging, with the directors usually the owners and management, thus with limited liability. This brought about a disincentive to expand. But the Acts passed in 1855 and 1862 encouraged these businesses
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