Tuesday, April 8, 2008
Dragomir on the History of Corporate Governance
Highlights for a History of Corporate Governance is a new paper by Voicu D. Dragomir, Academy of Economic Studies of Bucharest. It will appear in the European Journal of Management (2008). Here's the abstract: This paper argues for the pivotal role played by accountability in both corporate governance theory and practice. The reader is invited to take a journey through the history of the concept, by highlighting ten major points of interest, either real-life events or academic debates, which can be summarized as follows: the emergence of the corporation and the criticisms expressed by Adam Smith; the birth of the modern theory of corporate governance - Berle and Means (1932), Jensen and Meckling (1976) and Freeman (1984) - as proponents of agency theory, and stakeholder theory, respectively; corporate governance codes and the European Union's policy concerning corporate governance; the Enron case and the fall of Arthur Andersen, followed by the controversy surrounding the Sarbanes-Oxley Act; finally, the globalization of corporate governance and the responsibility of the true and fair reporting as promoted by the OECD Principles of Corporate governance. The aim of devising accountability is the set up of trust in governance institutions. However, the turbulent history of global governance points to the increasing fragility of businesses worldwide.