Corporate Governance Principles and Practices

This assignment delves into the crucial concepts of corporate governance, examining its defining principles and their significance in ensuring ethical and responsible business practices. It analyzes influential frameworks like those proposed by the Business Roundtable, COSO, OECD, and Deloitte, highlighting their global impact on corporate behavior. Furthermore, the assignment explores the relationship between corporate governance and organizational performance, drawing upon research and case studies to illustrate its practical implications.

Running Head: Essay
The function that suggests the different Countries regulations or protocols and their Institutions
making them able to execute the similar function like making sure fair managers, making the
disclosing and an accountability by manager is called ‘Convergence’. This essay is written to
make the corporate governance apply different concepts of change and identify the practices of
corporate governance that have been registered with-stand or accepted by countries or
corporations. This essay also comprises of the critical analysis of the nature and reasons behind
withstand and acceptance of corporate governance practices. For an example, this essay will
focus on defining the shareholders and the context of corporate governance by understanding the
origin of the power of various shareholders in UK and US. The power and interest in corporate
governance also taken into consideration to understand how to manage in the assorted power and
interest(Siems, 2008).
There has been an argument on if the corporate governance would be competent or
knowledgeable in a permanent or characteristic way, ranking higher to other prototypes of
Corporate Law. Many of the reporters have the thought that there has been the Global ideas
concerning economic or Political Theory or liberalization convergence towards the shareholder
integrated prototype, which is, mainly categorized as short term or shareholder oriented,
representing the predominant over other models of Corporate Law. Combined with the latest
report of the markets of finance and economy, the role of Multinational companies in the
international market, there is a Boom with the equity Holdings encouraging the ownership who
holds the shares in disseminates organizations or firms in the US and the UK. This had led to
consideration of different models of the shareholder aligned prototype of corporate governance
in the 20th century.From the year 2001 and onwards Hansmann and Kraakman predicted that the
extent of the practical convergence appeared or emerged is much less. The manifest examples of
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Running Head: Essay
prejudiced Convergence is the structure of the large government company or grouped firms of
the countries, the United States and the United Kingdom, which differs remarkably in a way that
is worthy of attention obstinately in a course of action, in spite of opposition differences in the
world's proprietorship structure in the layout of scattered and still analyzed without any
doubt(OECD, 2004). This essay takes issue with any statement that the system concerning
economic or Political Theory meant for the agreement on the predominance of the shareholder or
if it would be converted into energized activities to other alternative prototypes such as a
stakeholder prototype to be converted into the shareholder prototype by recreating the activities
throughout the world and suggesting that the stakeholder prototype will continue to maintain or
support alongside the shareholder model in a prominent duration. (Palmer, 2011).
It has been observed at that there are two different patterns of share proprietorship and two
dissimilar systems of corporate governance. The first pattern is scattered proprietorship of shares
consisting of many scattered shareholders holding small shares or stakes in the company which
provide them a small scale power and therefore to manage the legal or police cases. However, in
some cases, it has been noted that the prominence in some quarters of highly developed liquidity
market and to influence the factor which leads to the formation of disproportionate influence
because of possessing the opposite effect to that of another which prevent it to follow
disproportionate behavior. This topic of scattered ownership structure or architecture may tend
the shareholder to resign the company. On the other hand, some people argue that highly
scattered ownership provides aware of control upon the Management by taking the incentives of
the work they have managed. The second pattern shares the collective ownership of shares where
economically strong members of family, bank and other MNC companies throughout the world
hold large shares in the company, thereby getting the direct controls upon management. These
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Running Head: Essay
patterns are generally considered as stocks which are not developed or having a threat of filing of
the discipline of the management(Murthy, 2003). The two questions which can come up in the
mind after the results are, what are the various stimulation factors for the arrival or existence of
different proprietorship architectures of corporate governance?. And the second question is,
whether the Global convergence will become the sole pattern which will perform accordingly?
There are 3 approaches that have been proposed do analyze the causes of scattered and shared
ownership. The first one is the efficiency approach, which depends upon the traditional or
economic theory to find out which is the most efficient to bring about the greatest profit for the
shareholders. In accordance with this approach, the need of the industry for large scale
organization for the collection of share capital from small scattered shareholders (Business
Roundtable, 2012). Sometimes, it is also tried due to the undeveloped market that United States
system or United Kingdom systems are more efficient than the European systems of corporate
firms. The second approach is called the path and the politics dependency approach. In this
approach the reporter argued about the introduction of the legal validations or constraints applied
to the banks and other institutions to increase the cost, which may seamlessly provide the control
to the larger patterns or blocks of the shares, resulting in the gradual development of the
organization with the scattered or dispersed blocks. The reporter, in the year 1996, namely, Mark
Roe also explained the presence of the two patterns discussed above, and named them as a path
dependency(ACCA, 2012). He called the two patterns, path dependent because of the present or
current situations which maintained or supported oneself, especially at a minimal level in the
past or fore-times. The third approach is called the legal protection of minority approach,
proposed by Ben Pettet. In this approach the reported; John Coffee argues that if the legal and
strong protections will the provided to the scattered or small level shareholders, they can take the
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Running Head: Essay
action of dispossessing someone by the majority of shareholders, by motivating the scattered
shareholders in the organization. This may result in the creation of two systems, shareholder and
stakeholder to impact on the corporate governance for the long time. This has also been
evaluated that the laws also influence the choice rather than the legal systems. Also, the impact
varies from country to country (Llopis & Gasco, 2007).
Civil laws in the countries also follow the practice to emphasize a statement that stakeholder-
oriented model also propose low protection rate to the small shareholders. This may not have
been for all the countries, but also lead to controversy that countries in the world have not largely
proximity from different directions so as to ultimately develop the common thing, but also the
emphasis on electing the shares in the United States markets to regulate the United States
governance system (Masons, 2013).
The substructure of the Manager driven prototype related to United System in the year 1950 and
after the 10 consecutive years, it was concluded that the professional corporate managers can
guide to the large firms on how they can generate the interest of the public. The attraction of this
model has been lost because of the collapse of the conglomerate movement. The other model
known as low driven model defined in the year of 1950 by the Germans, where the employees
perform all of the management roles in the company. It is called co-determination where there
are different legal environment for different people. This is only practiced in the country like
USA where the workers have no vital role in corporate management and the country like German
where the employee plays an important role. This model is based on the previous statement with
the belief that direct representation for the German people are provided for individual employee
and that employee participation preclude some of the problems because of the agreement signed
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Running Head: Essay
between the labor and shareholders which give rise to the weak bondings or inefficient decisions
(Waddington, 2004).
The other model known as a state driven model was created after the France and Japan war,
which consists of a representative of large business corporations to develop and maintain a close
relationship with the bureaucratic organization and the corporate managers just to get the role
from the private company employees and to serve them better to get the public interest. This
model is not readily been used nowadays because of the state oriented model. The other reason
due in which the state driven model lost the power is its monopoly around the world in the year
1990.Some researchers have found that employee participation can help in the help in promoting
the prospects of the company rather than endangering the reporter name delta emphasis to this
majority because shareholders of a firm or organization shows integrity to the job and care about
the security of the job conditions of the work and getting benefits from the health and retirement.
This may result in the creation of two systems, shareholder and stakeholder to impact on the
corporate governance for the long time. This has also been evaluated that the laws also influence
the choice rather than the legal systems. Also, the impact varies from country to country
(Youssef, 2012).
Due to the failures of the alternative models the researchers and maintain crack man proposed
the second reason for the superior right of the shareholders they argue that there is a better
performance to the economic conditions of the shareholder oriented prototype remote then other
models the resultant of simple comparison between the shareholder oriented model and the
distance of the destruction jurisdictions in which the government propose different models and
forms are organized the world the main reasons for the development of common laws in the
countries which are in strong competition with a shareholder oriented prototype and the zonal
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Running Head: Essay
arenas such as Continental Europe and East Asia countries which consider other prototypes to be
considered as high performance efficiency in terms of Economics with in terms of economic
performance than other countries. They also claim that the US economy is still the world's
leading economy, leaving behind the economy of Germany and Japan to apply to the shareholder
prototype, the performance of US can be described with the fact of adopting shareholder oriented
-prototype of large firms or organizations (Olannye & David, 2014).
In contradictory to this the professional stakeholder theology researchers argue that the
stakeholder is a friendly model which please the economic performance for some specific from
and the society for the long term rather than the short term and it also brings the degree of
superiority this is researchers argue that the employees who respect their investment and ignore
me produces higher productivity they also are you dead stakeholder friendly model of
cooperation can retain the profitability for the considerable amount of time (Petersen, 2013).
Then,Hansmann and Kraakman. Formulating the theory the other search are called Petty
Ireland’s modelwhich states that the US flourish the economy of the Japan and Germany because
of the equity prices on the high. Again driven management took an immediate action in
concluding that the US economy over is on the simplicity superiority on promoting the US
economy over Japan and Germany lying down the alliance of the US economy to improve the
performance and efficiency followed by an economic recession by the early year of 2001. By the
late 2001, there were financial scandals of US corporations which involve the US in the
downgrading of the performance with the USA gained in the year of 80s and 90s. So they
concluded that approximately under 10 years financial period in US history stands the credibility
of Hansmann and Kraakman (DeLoach & Thomson, 2014).
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Running Head: Essay
This essay shows that the Anglo-American shareholder-oriented prototype is different in terms of
of reference. Although, overall, the beguile conclusion is that the shareholder-oriented prototype
needs worthy of attention and calculation of different factors which slows down the process of
transformation of the corporate governance prototype. It can be seen that the removal of
convergence is difficult and it may remain to be seen worldwide. Assuming that corporate
governance prototypes must be held to the attitudes and values and cautious about change or
innovation about learning from one another doesn’t mean it is not going to happen that the
consensus and convergence in the international market will emerge in the nearly accurate
resultant. In fact, each system must achieve maximum productivity with minimum wasted effort
or expense for us to another system, there should not be any overall change taking place in the
system itself without demolishing the process and its reverse which it is occurring at equal rates
(Deloitte, 2015). This can be justified by the confirmation of the history of the Japanese market
that the core values which can be safeguarded does not come into the immediate attention to the
market. This has influenced the employee of the Japan to willingly accept the new changes or the
rules for the architecture encircling the individual directors and committee board. This essay also
includes the critical analysis of the nature and reasons behind withstand and acceptance of
corporate governance practices. For an example, this essay will focus on defining the
shareholders and the context of corporate governance by understanding the origin of the power
of various shareholders in UK and US. Another example, can be the UK government proposal,
which binds or encapsulates the laws of collecting all the profits coming from the interest of the
stakeholders in the company.
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Running Head: Essay
References
ACCA, 2012. Corporate governance: the board of directors and standing committees, Available
at: http://www.accaglobal.com/content/dam/acca/global/PDF-students/2012s/sa_oct12-
f1fab_governance.pdf
Business Roundtable, 2012. Principles of Corporate Governance, Available at:
http://businessroundtable.org/sites/default/files/BRT_Principles_of_Corporate_Governance_-
2012_Formatted_Final.pdf
DeLoach, J. & Thomson, J., 2014. Improving organizational performance and governance,
Available at: https://na.theiia.org/standards-guidance/Public%20Documents/COSO
%20Improving%20Organizational%20Performance%20and%20Governance.pdf
Deloitte, 2015. Global Trends in Corporate Governance, Available at:
https://www2.deloitte.com/content/dam/Deloitte/in/Documents/risk/Corporate%20Governance/
in-risk-global-trends-in-corporate-governance-4Dec2015-noexp.pdf
Llopis, J. & Gasco, J., 2007. Corporate governance and organisational culture: The role of ethics
officers. International Journal of Disclosure and Governance, 4(2), p. 96–105.
Masons, P., 2013. Corporate Governance: The benefits of good practice for private companies
in the GCC, Available at: https://www.pinsentmasons.com/PDF/gulfregion/Article-
CorporateGovernanceFeb2013.pdf
Murthy, N., 2003. Consultative paper on review of corporate governance norms: SEBI,
Available at:http://www.sebi.gov.in/sebi_data/attachdocs/1357290354602.pdf
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OECD, 2004. OECD Principles of Corporate Governance, Available at:
http://www.oecd.org/corporate/ca/corporategovernanceprinciples/31557724.pdf
Olannye, A. & David, A., 2014. Corporate Governance and Organizational Performance. Journal
of Emerging Trends in Economics and Management Sciences, 5(6), pp.525-31.
Palmer, C., 2011. Has the worldwide convergence on the anglo-american style shareholder
model of corporate law yet been assured?, Available at:
http://www.ucl.ac.uk/opticon1826/currentissue/articles/Palmer_Issue11_Opticon1826.pdf
Petersen, A., 2013. The Importance of Governance and Business Ethics: CIPS, Available at:
https://www.cips.org/Documents/CIPS%202013-02-05.pdf
Siems, M., 2008. Convergence In Shareholder Law, Available at:
http://assets.cambridge.org/97805211/87916/frontmatter/9780521187916_frontmatter.pdf
Waddington, N., 2004. The Europeanisation of Corporate Governance in Germany and the UK,
Available at: http://aei.pitt.edu/6119/1/waddington16july.pdf
Youssef, T., 2012. Corporate Governance: An Overview – Around the Globe, Available at:
http://www.eiod.org/uploads/Publications/Pdf/Corp.%20Governance-1.pdf
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