International Corporate Governance : Corporate Management Essay
Corporate governance, which is set out by many different mechanisms, has been thought by many to be a large factor in determining future success of a business in terms of its profitability and/or relative market value (just several metrics to measure success by). Secondly, the extent to which these mechanisms affect corporate decisions is a significant area of interest. This initial journal article (Diane K. Denis and John J. McConnell, 2003) sets out these different mechanisms: Board of directors, executive pay, ownership structure, takeover market, and the legal system. It then analyses, through many exterior research journals, the degree to which this is relevant in countries across the world, and how each of these ‘mechanisms’ differ.
Many of the different countries being examined have recently (in the last 20-25 years) put into place some sort of corporate governance that may or may not have been applied by the corporations operating in that country. By this means, we are able to distinguish whether corporate governance actually makes any sort of difference to business performance and how this can possibly differ throughout different areas of the world, due to the fact that in most cases there is a clear ‘before and after’ scenario.
Going through each mechanism, the authors dissect the specific aspects of each, in order to examine what makes corporate governance effective throughout the world. The first mechanism (board of…