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| Topic : Corporate Governance |
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Business Process Management
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Source : http://knowledge.wharton.upenn.edu
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2 comments
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last activity : 07 06 2010 20:18:04 +0000
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"Global standards". One doesn't hear the words quite as often as one did four or five years ago. The urge to imitate everything American - which is what the phrase usually meant - has diminished with the end of the "new economy" boom. But the assumption that the whole globe is destined to move towards a homogeneous future of Anglo-Saxon capitalism and American-style democracy is still common.
Let us take the desirable question first. Why should nation-states seek to create or preserve legal frameworks fostering distinctive national modes of corporate governance different from those of the globally dominant American model?
Basically having one model is not likely but it is desirable take a look at this, Nevertheless, the notion that capitalism is one and indivisible, and that there is one best way of organizing business corporations persists. Take a sample of the 380,000 web sites that Google offers you when you search for "corporate governance" and you will see that the vast majority of them reflect this view unquestioningly.
Just as different nations have developed languages, foods and local customs, they also have adapted their own forms of corporate governance and board structures.
Now the idea here is, as business continues to globalize, new pressure from international capital pools and government regulators may diminish the local and national flavor of corporate boards.
Companies that globalize operations or ownership know that adoption of internationally accepted governance standards would help them compete against other firms.
In the next 15 years, corporate boards around the world will move towards a model in which boards typically have 10 to 15 members and three or four major committees. A board size of 11 members is "the sweet spot at the moment for U.S. companies.
About 15 years ago, when large institutional investors such as pension funds and retirement plans began to demand better oversight, shareholders were able to start reasserting their interests. As a result, management influence on boards has waned. Another force driving convergence is regulation. Following the passage of the Sarbanes-Oxley Act of 2002 in the United States, other countries enacted similar regulatory provisions that also focus on some of the key elements of board structure and overall governance.
Companies that want that money will have to play by their rules. So the question will be: How much commonality will they want across systems of governance?" A strong, independent board creates greater managerial accountability and better performance long-term."
If hundreds of thousands of companies become just a little better governed and a little higher performing, the world would be a better place.
Let us take the desirable question first. Why should nation-states seek to create or preserve legal frameworks fostering distinctive national modes of corporate governance different from those of the globally dominant American model?
Basically having one model is not likely but it is desirable take a look at this, Nevertheless, the notion that capitalism is one and indivisible, and that there is one best way of organizing business corporations persists. Take a sample of the 380,000 web sites that Google offers you when you search for "corporate governance" and you will see that the vast majority of them reflect this view unquestioningly.
Just as different nations have developed languages, foods and local customs, they also have adapted their own forms of corporate governance and board structures.
Now the idea here is, as business continues to globalize, new pressure from international capital pools and government regulators may diminish the local and national flavor of corporate boards.
Companies that globalize operations or ownership know that adoption of internationally accepted governance standards would help them compete against other firms.
In the next 15 years, corporate boards around the world will move towards a model in which boards typically have 10 to 15 members and three or four major committees. A board size of 11 members is "the sweet spot at the moment for U.S. companies.
About 15 years ago, when large institutional investors such as pension funds and retirement plans began to demand better oversight, shareholders were able to start reasserting their interests. As a result, management influence on boards has waned. Another force driving convergence is regulation. Following the passage of the Sarbanes-Oxley Act of 2002 in the United States, other countries enacted similar regulatory provisions that also focus on some of the key elements of board structure and overall governance.
Companies that want that money will have to play by their rules. So the question will be: How much commonality will they want across systems of governance?" A strong, independent board creates greater managerial accountability and better performance long-term."
If hundreds of thousands of companies become just a little better governed and a little higher performing, the world would be a better place.
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2 comments on "Is One Global Model of Corporate Governance Likely, or Even Desirable?"
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Commented by
varsha ., Technical manger(QMS)
| 11 19 2008 17:33:38 +0000
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Commented by
Hardik Patel, Team Lead (Staffing and Recruitment), Rishabh Softwares Pvt. Ltd. / Rishi Infotech Pvt. Ltd
| 07 23 2008 14:35:34 +0000
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