Essay On The Concept Of Corporate Governance

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Reflection Paper #4: The Concept of Corporate Governance

Lionell C. Henderson

Northwood University

MBA 664: Satisfying Shareholders

Spring 2015 – Evening

Adam Guerrero, PhD

Adam Guerrero, PhD

This was a very interesting article, in my opinion it brings to mind the derived phrase, which came first the chicken or the egg. Meaning, is corporate governance an attempt to control the results of unethical practices of corporations or is it meant to deter them. In reading this article, it is clear that certain corporations practiced unethical business behaviors for self-interest, but the questions this author have are: 1. Should corporate governance be regulated by the legislature as well as the organization and to what degree, 2. Is corporate governance, there to protect the shareholder or the stakeholder, 3. How effective is corporate governance on a global level. The need for a governance system is based on the assumption that the separation between the owners of a company and its management provides self-interest executives the opportunity to take actions that benefit themselves, with the cost of these actions borne by the owners (Larcker & Tayan, 2008).
Should corporate governance be regulated by legislation as well as the organization and to what degree? The most important formal legislation pertaining to this issue was the Sarbanes-Oxley Act of 2002, which insisted there be a system of requirements to reduce conflicts of interest and improve corporate controls.
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