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Influence Of National Approach To Corporate Governance

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Reprisal corporate failures in other parts of the world including the cases of HIH and One. Tel in Australia, and Parmalat in Italy made most countries realise that the issue of corporate governance was something that required universal attention and focus5. Today, corporate governance is practiced across the globe as a business management methodology which comprises all mechanisms by which corporations are controlled and directed. 6 Through corporate governance, corporations are generally expected to have structures that clearly distribute rights and responsibilities to different entities and stakeholders involved with the management of the corporation.

Some of these entities and stakeholders include board of directors, managers, creditors, shareholders, customers, and employees. As part of the structures to distribute rights and responsibilities, the practice of making only a few people overly powerful in the corporation to manipulate affairs is minimised. Corporate governance can be said to be built on a number of theories as can identified in literature. Two of these are stakeholder theory and agency theory. With all these two theories, powers are distributed across the organisation in a manner that ensures checks and balance. 7 Through the doctrines of the two theories, the principles have corporate governance have been established based on three major documents including The Cadbury Report (UK, 1992), the (OECD, 1998 and 2004), the Sarbanes-Oxley Act of 2002 (US, 2002). 8 The principles of corporate governance are five and include right and equitable treatment of shareholders, interests of other stakeholders, role and responsibility of the board, integrity and ethical behaviour, and disclosure and transparency. 9 As observed by the OECD, what makes it possible to have individual national approaches to corporate governance is that the principles of corporate governance are open-ended and subject to individual interpretations and applications. 10 That is, each of the five principles can be implemented in different ways as the principles serve as an end to a means.

The means therefore has to do with the approaches used by the countries in regulating countries. As opined by Valentin and Vitaliy, while enforcing the principles of corporate governance, countries seek to achieve an era where the management of corporations shall be done with the highest form of

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preview essay on Influence Of National Approach To Corporate Governance
  • Pages: 16 (4000 words)
  • Document Type: Essay
  • Subject: Law
  • Level: Undergraduate
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