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Corporate
Governance and Incomplete Contracts: The Role of Procedural
Rationality
-- Rajeeva
Sinha
Corporate
governance becomes necessary because of the incomplete contracts
between shareholders and managers. The discussion on corporate
governance has been limited by its focus on substantive rationality.
A comprehensive assessment of the incomplete contracts between
shareholders and managers and an analysis of opportunism shows
that procedural rationality, and not substantive rationality
is appropriate for the design of corporate governance. Governance
structures not incorporating a procedural learning mechanism
will exacerbate the agency problem in shareholder management
relations. This analysis is significant in the context of
the present disillusionment with corporate governance structures.
©
2005 IUP. All Rights Reserved.
Sunrise of Business
Corporate Governance in Malaysia
-- Wai-Ching
Poon and Kevin Lock-Teng Low
This paper examines
the roles played by the board's independence, the audit committee's independence
and the separate roles of the board Chairman and the Chief Executive Officers
on the suitability of financial reporting. Results reveal that corporate governance
is improving as the degree of disclosure has increased, there is an entry to
more independent outside directors, and influence of inside directors is curtailed.
Moreover, board of director independence, audit committee independence and the
separation of the top two roles improve effectiveness, and suggest that the
public listed companies in Malaysia have complied with the recommendation of
the Malaysian Code of Corporate Governance.
©
2005 IUP. All Rights Reserved.
Relationship-based
Model of Corporate Governance: A Competing Governance Model
-- Malla Praveen Bhasa
Traditional corporate
governance scholarship excessively focused on the after-effects of separation
of ownership from control. While American corporations were characterized by
diffusely held ownership structures, most continental and Asian countries were
marked by the concentrated ownership morphology. Traditional scholarship, however,
did not account for this morphology. Thus, even seven decades after Berle and
Means proposed their theory of separation of ownership from control, research
did not move away from its previous unilateral focus. Unlike the market-centric
model where markets are central to disciplining corporate misgovernance, the
relationship-based model is considered to be more proactive with stakeholders
playing a vital role in controlling misgovernance. In this paper, the author
tries to explain the competing governance model with Japanese Kieretsu and German
co-deterministic governance models. While some researchers have argued that
concentrated ownership models perform better than the widely diffused ones,
others argue that relationship economies are characterized by weak minority
shareholder protection. However, concentrated ownership firms, despite their
illiquid markets, have stayed alongside the Anglo-American firms and have consistently
performed better.
©
2005 IUP. All Rights Reserved.
Corporate
Governance in Germany
-- S
C Das
Till recently,
the influence and contribution of various factors, including an effective corporate
governance system through two-tier boards, have enabled the German industry
to prosper. Despite being one of the strongest economic nations in the world,
the stock market in Germany has not developed when compared to other developed
nations. On the contrary, the banks hold the key to economic progress and dominate
the German corporate institutions. Today, the corporate governance system in
Germany is under severe strain due to recession, coupled with increased social
overheads and huge labor costs on the one hand and global competition on the
other. In this article, the author explains the present governance system, prescribes
certain changes in regulatory measures and outlines the emerging changes towards
a revised system of corporate governance in Germany. The author strongly believes
that the governance system in Germany is capable of overcoming `pressures' by
its inbuilt resilience, fundamentally strong dynamism and well-practiced accountability.
©
2005 IUP. All Rights Reserved.
Corporate Governance
and Corporate Valuation—A Perspective Study
-- Indrajit
Dube and Sameer Sah
The paper focuses
on investigating any correlation between market condition (i.e., in terms of
corporate valuation) and the principles of governance in the corporate legal
system. It was generally believed that the word `governance' used in the corporate
legal system, perhaps, is more of a simile than metaphor, because the corporate
legal system is more of an outcome of private arrangement than a public system
of governance which originally evolved from a political system. Present investigations
demonstrate that the market is more responsive towards issues of fair dealing,
transparency and accountability, which are mandates in favor of good governance.
The authors have concluded with the observation that there is a nexus between
the two and the second depends on the first.
©
2005 IUP. All Rights Reserved.
Case Study
Citibank:
Ethical Dilemma
-- N
Janardhan Rao and Shishir Kumar
Citigroup has been
facing several litigations for its accounting improprieties. This has been the
cause for severe damage to its reputation globally. To enhance its sagging image
and restructure its bottom line, Citibank, under the new leadership of Chuck
Prince, has advocated a new set of cultural values and ethics to create greater
transparency in corporate governance.
©
2005 IUP. All Rights Reserved.
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