BUS320 Corporate Governance | Report
Added on 2020-05-08
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Running head: CORPORATE GOVERNANCE Corporate GovernanceName of the StudentName of the UniversityAuthor Note
1CORPORATE GOVERNANCE Executive SummaryIn the contemporary commercial world, the working of the corporations have implications notonly on the organization itself but also have significant implications on the stakeholders who aredirectly as well as indirectly involved with the organization and the community as a whole in thedomain of which the corporation operates. The purpose of the existence of these corporations,thus, become an important issue as the purpose can be for maximizing the profits of theshareholders or the increase in the welfare of the stakeholders. The report discussed the varioustheories and assertions which are present in this aspect in the framework of normative and justicetheories and tries to analyze the feasibility and practical applicability of amalgamations of boththe theories which satisfies the profit as well as the welfare objectives of the corporations and thesociety.
2CORPORATE GOVERNANCE Table of ContentsIntroduction......................................................................................................................................3Literature Review............................................................................................................................4Benefits of a broader view of firm...................................................................................................6Analysis of proposed combinations of Corporate Governance Theories........................................9a) Social Contract Theory............................................................................................................9b) Theory of Justice...................................................................................................................10c) Stakeholders Theory..............................................................................................................10d) Amalgamation of the theories...............................................................................................11Limitations of these theories..........................................................................................................12Conclusion and Recommendations................................................................................................13References......................................................................................................................................14
3CORPORATE GOVERNANCE Introduction The word “corporation” holds immense significance in the global business world. By theterm itself, a corporation can be defined as separate legal entity on its own which is distinct fromthe owners themselves and which can have the privilege of enjoying the rights which a businessindividual also possess. To carry out all kind of commercial activities in the current day businessworld, corporation is a necessity. Generally, a corporation is a group of people who legally act asa single entity towards achieving a specific goal or set of goals (Bakan 2012). The primary concern in the corporation and their activities is the purpose of theirexistence and the goals towards which they operate. There has been a long going debate over theoverall purpose of the corporations in the business world. Though with time the nature, legalframework and dynamics of the corporations and businesses have changed substantially, thedebate has remained (Reiser 2012). On one hand where some school of thoughts suggest that thepurpose of existence of a corporation is to work towards maximization of the profits of theshareholders of that concerned corporation the other contradicting school of thought asserts thatmaximizing only the profits of the shareholders should not be the only objective of a corporation.According to this theoretical notion, the corporations should also take into account the broaderperspective of maximizing the overall welfare of all the stakeholders who are voluntarily orinvoluntarily attached to them (Laczniak and Murphy 2012). Over the years these two conflicting theories have been in existence and many newconcepts have emerged regarding the purpose of a corporation. The report tries to take intoaccount this debate and tries to analyze different theoretical frameworks, which exist regardingthe purpose of a corporation. It also tries to discuss about the scope of building up a successful
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