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Article
Publication date: 9 July 2018

Alexander Styhre

Corporate governance is the practice of balancing various stakeholder interests within the legal device of the chartered business. Recent changes in the competitive…

Abstract

Purpose

Corporate governance is the practice of balancing various stakeholder interests within the legal device of the chartered business. Recent changes in the competitive capitalism including the Great Recession, now entering its second decade, have called for reforms within the defined corporate system. To sketch a wider picture of corporate governance issues and the debate over time, this paper aims to identify two philosophical traditions, a British and liberal tradition and a continental statist tradition, which have bearings for how the legal device of the corporation is understood.

Design/methodology/approach

This conceptual paper combines legal philosophy and legal studies, management studies, economics and economic sociology literatures.

Findings

In the former tradition, the firm and its ownership are exclusively associated with irreducibly individual rights. In the latter tradition, property rights remain the core of legal systems, but rather than being an end in itself (as in the liberal tradition), such property rights are merely the starting point for the individual’s wider engagement in social and public affairs. These two traditions enact the firm differently and emphasize specific benefits. In the former tradition, associated with a shareholder primacy model, individual rent-seeking is foregrounded; in the latter tradition, associated with legal and management scholarship, the team production qualities of the firm are emphasized.

Originality/value

This conceptual paper offers an analysis of the roots of differences between Anglo-American and continental corporate governance traditions, a scholarly study that is of great theoretical and practical relevance in the era of the Great Depression.

Details

International Journal of Organizational Analysis, vol. 26 no. 3
Type: Research Article
ISSN: 1934-8835

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Article
Publication date: 1 May 2002

Richard L. Brinkman and June E. Brinkman

The Berle and Means thesis focuses on a managerial revolution in which corporate control came to be transferred from owners to managers. Currently, it is arguable that…

Abstract

The Berle and Means thesis focuses on a managerial revolution in which corporate control came to be transferred from owners to managers. Currently, it is arguable that control of corporate policy has shifted back to owners in what has come to be called “investor capitalism.” Stock market manipulators, as owners, have currently come to assert increased levels of control over CEO autonomy. This empirical reality appears in a vicious circle culminating in excessive CEO profits. The result has been to give support to a basic Veblenian assertion that imbecile business institutions hold sway to direct and dominate the economic process. In this process, the making of money rather than the production of goods serviceable for basic human needs have increasingly come to prevail over the US economy and culture.

Details

International Journal of Social Economics, vol. 29 no. 5
Type: Research Article
ISSN: 0306-8293

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Article
Publication date: 1 December 1996

Omid Nodoushani

Posits that since the New Deal era, 1933‐1940, the theory of managerial revolution has sparked tremendous debate concerning the governance of the USA’s large corporations…

Abstract

Posits that since the New Deal era, 1933‐1940, the theory of managerial revolution has sparked tremendous debate concerning the governance of the USA’s large corporations. Argues that an interpretation of The Modern Corporation and Private Property, within the context of other works by Adolf Berle and Gardiner Means, could raise profound insights in terms of a paradigm shift concerning the governance of big corporations in contemporary economy.

Details

Journal of Management History, vol. 2 no. 4
Type: Research Article
ISSN: 1355-252X

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Article
Publication date: 12 September 2016

Josh Bendickson, Jeff Muldoon, Eric W. Liguori and Phillip E. Davis

By revisiting the agency theory literature, this paper aims to both incrementally advance historical viewpoints and reveal four prominent influences on agency theory…

Abstract

Purpose

By revisiting the agency theory literature, this paper aims to both incrementally advance historical viewpoints and reveal four prominent influences on agency theory: Weber and Simon, The Great Depression, Cooperation and the Chicago School. This is critical given that understanding the history behind the authors’ major theoretical lenses is fundamental to using these theories to explain various phenomena.

Design/methodology/approach

Drawing on a plethora of archival sources and following the influence-mapping approach used by other management history scholars, this manuscript synthesizes historical accounts and archival information to provide a clearer picture of the major historical influences in the formation of agency theory.

Findings

We shed light on four areas related to management history that helped propel agency theory. Whereas past scholarship has not recognised them as influencers, we find and show how the industrial revolution, unionization, the stock exchange and other management approaches all played a role in the development of agency theory’s core tenants.

Originality/value

We extend upon the influential people and events that shaped agency theory, thus providing a fuller understanding of the theory’s usefulness. Moreover, we fill in gaps enabling scholars to better understand the context in which the core tenants of agency theory were developed.

Details

Journal of Management History, vol. 22 no. 4
Type: Research Article
ISSN: 1751-1348

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Article
Publication date: 1 January 1993

Abdul Aziz and Saeed Mortazavi

Since the publication of The Modem Corporation and Private Property, by Adolf A. Berle, Jr. and Gardiner C. Means, economists have written extensively on the proposition…

Abstract

Since the publication of The Modem Corporation and Private Property, by Adolf A. Berle, Jr. and Gardiner C. Means, economists have written extensively on the proposition that ownership and control have been separated in the large corporations. Additionally, the effects of this separation on the conduct of corporate enterprise have been the subject of many investigations. The present standing of financial economists on this issue is formalized by Jensen and Meckling. They consider the managers as the agents of firm's stockholders and conclude that a certain amount of agency costs is unavoidable. These costs, they argue, emanate from pecuniary as well as non‐ pecuniary expenditures by the managers to maximize their own utilities that will be detrimental to the firm's stockholders.

Details

Managerial Finance, vol. 19 no. 1
Type: Research Article
ISSN: 0307-4358

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Book part
Publication date: 19 May 2009

William W. Bratton

This chapter collects and categorizes the principal theoretical debates respecting corporate law in the United States. What emerges is not a synthetic whole but a…

Abstract

This chapter collects and categorizes the principal theoretical debates respecting corporate law in the United States. What emerges is not a synthetic whole but a dialectic framework. Corporate law's theoretical debates do not resolve; their arguments and conclusions are determined by metapolitical preferences and unverified notions about aligning productivity incentives. But despite the debates, the acknowledged premise that corporations exist to create wealth by producing goods and services at a profit directs all theories of corporate law to two objectives. First, corporate law encourages long-term investment and risk-taking by facilitating a delegation of decision-making authority from the providers of capital to the expert managers who deploy it. Second, corporate law facilitates investment in producing assets at the lowest possible cost of capital, securing the presence of liquid trading markets in corporate securities.

Details

Law & Economics: Toward Social Justice
Type: Book
ISBN: 978-1-84855-335-4

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Article
Publication date: 12 November 2018

Uchechukwu Nwoke, Collins Chikodi Ajibo and Timothy Okechukwu Umahi

This paper aims to investigate the extent to which the ideology of shareholder value is compatible with that of transformative corporate social responsibility (CSR). It…

Abstract

Purpose

This paper aims to investigate the extent to which the ideology of shareholder value is compatible with that of transformative corporate social responsibility (CSR). It traces the transformation of corporations from quasi-public institutions at inception to purely private enterprises beginning from the middle of the nineteenth century and attempts to locate the ideology of CSR within the wider viewpoint of shareholder value.

Design/methodology/approach

This paper adopts a doctrinal approach through a critical evaluation of the nature and implications of the shareholder value ideology. Using existing literature in the area, it traces the evolution of the shareholder value ideology and how it is antithetical to any meaningful CSR regime.

Findings

The paper finds that there is a fundamental tension between ideas about the desirability of effective CSR and the belief that it is to the benefit of society as a whole for corporations to be run solely in the interest of their shareholders and for managers to seek to maximize shareholder value. This ideological tension renders contemporary CSR ineffective.

Originality/value

The paper offers a fresh insight or analysis into the transformation of corporations from quasi-social institutions to purely private enterprises in the middle of the nineteenth century. It does this by engaging in a historical narrative of the evolution of the corporate form and how contemporary ideas of shareholder value have resulted in the emergence of a contemporary CSR devoid of the radical spirit of CSR in the 1950s and 1960s.

Details

International Journal of Law and Management, vol. 60 no. 6
Type: Research Article
ISSN: 1754-243X

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Article
Publication date: 13 April 2015

Bernard Mees

The purpose of this paper is to consider the way in which agency theory has crowded out other approaches to understanding the governance of modern businesses. The paper…

Abstract

Purpose

The purpose of this paper is to consider the way in which agency theory has crowded out other approaches to understanding the governance of modern businesses. The paper rescues the meaning and context which informed the American corporate governance reform movement originally and demonstrates how the economically predicated agency approach became dominant in academic considerations of corporate governance.

Design/methodology/approach

Both primary and secondary sources were considered in a Foucauldian history of ideas approach.

Findings

Other approaches to corporate governance have been pushed out of the mainstream of corporate governance discourse by an economic model which excludes many of the key issues which informed the notion originally.

Practical implications

Dominant academic attitudes to corporate governance have occluded other ways in which the governance of corporations can be understood.

Originality/value

Previous accounts of corporate governance have ignored the alternative approaches represented before agency theory became dominant.

Details

Journal of Management History, vol. 21 no. 2
Type: Research Article
ISSN: 1751-1348

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Article
Publication date: 1 January 2012

Joseph E.O. Abugu

This paper revisits existing regulatory approaches in tackling the practices of bogus and extravagant company directors' remuneration packages, often called “fat cat…

Abstract

Purpose

This paper revisits existing regulatory approaches in tackling the practices of bogus and extravagant company directors' remuneration packages, often called “fat cat packages” which erode company capital and dividend return to shareholders. It explores the efficacy of existing rules, pointing out their inadequacy and ineffectiveness. It emphasizes the need to hold directors accountable to shareholders for remuneration received. The object is to proffer a more comprehensive and effective regulatory regime for directors' remuneration packages.

Design/methodology/approach

The paper is analytical, reviewing several literature and case law on the subject. It adopts a comparative approach drawly primarily from the Nigerian Companies and Allied Matters Act 2004 which is compared in critical areas with the provisions of the English Companies Act 1985 and 2006.

Findings

The analysis concludes that existing rules monitoring directors' remunerations packages are ineffective. The rules do not address directors' pecks, expenses and other perquisites of office. Often these pecks are more valuable to the director than the actual remuneration package and they constitute a veritable avenue for dissipating company capital. The articles also finds that audit committees and their members are presently not subjected to any liability rules for their role as financial gate keepers verifying the performance of the accounting and audit functions.

Practical implications

The article points out that until regulations are formulated to regulate or cap directors' pecks and expenses, there exists ample room for fraudulent dissipation of company resources resulting in blotted costs of administration and reduced rewards for shareholders. It also advocates the need to subject audit committees to a higher regime of liability in public companies.

Originality/value

The paper draws the attention of scholars, law reformers and law enforcement agencies to the inadequacies of the rules regulating directors' remuneration packages and suggests additional rules. It will certainly incite further scholarly discussion and challenge law reformers to address the issues raised in several jurisdictions.

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Article
Publication date: 1 January 1994

Denis Goulet

The collapse of command economies in the Second World, and the monopoly of structural adjustment as prescribed development policy for the Third World, have thrust…

Abstract

The collapse of command economies in the Second World, and the monopoly of structural adjustment as prescribed development policy for the Third World, have thrust incentives to the center of debates about economic policy. As one political economist declares, “Few economists today would dispute the desirability of using incentives to invite and welcome the contributions of people's resources to the economy rather than employing commands and public appeals.” The British development economist Reginald Green puts it more pointedly: “The importance of incentives is not a matter open to debate, nor is the importance of material incentives and participation. The divergence is one which incentives are most cost effective and how to package them in specific contexts.”

Details

Humanomics, vol. 10 no. 1
Type: Research Article
ISSN: 0828-8666

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