Uitgebreide samenvatting van het boek Corporate Governance. Te gebruiken voor het vak Corporate Governance voor het derde jaar (module 11 CHANGEL) van de studie International Business Administration op Universiteit Twente. Bevat hoofdstukken 2, 4 t/m 6 & 8 t/m 10. Kan ook gebruikt worden op andere ...
Corporate Governance Reading Material
Corporate Governance by Christine A. Mallin, Sixth edition
,Index
- Chapter 2 – Theoretical aspects of corporate governance
- Chapter 4 – Shareholders and stakeholders (excl. section on Guidance on shareholders’
and stakeholders’ interests and subsections)
- Chapter 5 – Family-owned firms (excl. section on Smaller quote firms and further)
- Chapter 6 – The role of institutional investors in corporate governance (excl. section on
Corporate governance and corporate performance)
- Chapter 8 – Directors and board structure (excl. subsections on Hampton-Alexander
Review (2017) & Parker Review (2017))
- Chapter 9 – Directors’ performance and remuneration (excl. section on Remuneration of
non-executive directors and further)
- Chapter 10 – Corporate Governance in continental Europe
,CHAPTER 2 – THEORETICAL ASPECTS OF CORPORATE GOVERNANCE
* Corporate governance is relatively new
Theories that have affected corporate governance development
1. Agency theory
2. Transaction cost economics (TCE)
3. Stakeholder theory
4. Stewardship theory
5. Class hegemony theory
6. Managerial hegemony theory
7. Path dependence theory
8. Resource dependence theory
9. Institutional theory
10. Political theory
11. Network governance
Agency theory = identifies the agency relationship where one part (principal) delegates work to
another party (agent)
- Jensen and Meckling (1976)
- Fama and Jensen (1983)
Disadvantages of agency theory
1. Agent may not act in the best interests of the principal
2. Agent may act only partially in the best interests of the principal
3. Information asymmetry
Information asymmetry = the principal and the agent have access to different levels of
information
Transaction cost economics (TCE) = views the firm itself as a governance structure
- Coase (1937)
- Williamson (1984)
- Hart (1995)
Stakeholder theory = takes account of wider group of constituents rather than focusing on
shareholders
Consequence of focusing on shareholders: The maintenance or enhancement of shareholder
value is paramount, whereas when a wide stakegroup holder is taken into account, the
overriding focus on shareholder value becomes less self-evident
, Rationale for shareholders > other stakeholders: They are the recipient for the residual free
cash flow
- Jensen (2001)
Stewardship theory = directors are regarded as the stewards of the company’s assets and will
be predisposed to act in the best interests of the shareholders
- Donaldson and Davis (1991)
Class hegemony theory = directors view themselves as an elite at the top of the company and
will recruit/promote to new director appointments taking into account how well new
appointments might fit into that elite
- Mace (1971)
Managerial hegemony theory = management of a company, with its knowledge of day-to-day
operations, may effectively dominate the directors and hence weaken the influence of the
directors
- Mace (1971)
Path dependence theory = may be structure driven and rule driven
‘Initial’ ownership structures = can affect both the identity of the rules that would be efficient
and the interest group politics that can determine which rules would actually be chosen
- Bebchuk and Roe (1999)
Resource dependence theory = directors are able to connect the company to the resources
needed to achieve corporate objectives
- Tricker (2009, 2012)
Institutional theory = influences societal beliefs and practices that impact on various ‘actors’
within society
- Scott (1987)
Political theory = a significant influence on different ownership and governance structures
- Scott (1987)
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