Impact Of Corporations On Corporate Governance Essay examples

1772 Words Sep 29th, 2014 8 Pages
When corporations were first constructed, they were constructed with the goal of serving the investors rather than the management. Their primary objective was to “conduct business activities with a view toward enhancing corporate profit and shareholder gain.” A system of good faith was meant to govern them in which the only interests that were to be focused on were the interests of the corporation as a whole and on the shareholders. The system of governance that existed in corporations began with investors and proceeded through to a board of directors who were meant to be in charge of management. Yet, this dynamic did not hold true in many corporations of our time. It was intended that the highest authority of corporations be the board of directors, but during the decades from the 1960’s through to the 1990’s, a recurrent crisis of corporate governance was occurring. In this crisis, the boards of directors began to lose power while management began making decisions that were ultimately detrimental to the corporation as a whole. With management left unchecked, many corporations collapsed. The question we pose now is why? What happened that caused these collapses and most importantly what can we do so that history does not repeat itself in the future? The recurrent crisis of governance that occurred, occurred between the years of 1960 to 1990, with a focus on the 1980’s and 1990’s. During both decades, management of corporations was given the task of building up the…

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