Corporate Governance: A Study In The Context Of Globalisation

Abstract

Corporate governance, meaning the mechanism by which corporations and their managers are governed, encompasses the structural and behavioural issues of the corporate board as to how it should respond to its shareholders, financiers, government and employees—the stakeholders. But, in practice, there is no clear-cut definition of corporate governance. According to Milton Friedman, “Corporate governance is to conduct the business in accordance with owners’ or shareholders’ desire, which generally will be to make as much money as possible, while conforming to the basic rules of the society embodied in law and social customs.” Apparently, in the present-day concept, Friedman’s definition is narrow in scope. Over the period of time, the definition of corporate governance has been widened. It now encompasses the interest of not only the shareholders but also other stakeholders. There is considerable debate about what actually constitutes corporate governance, but its key elements concern the enhancement of corporate performance via the supervision or monitoring of management performance and ensuring the accountability of management to shareholders and other stakeholders.

Corporate governance has become a special aspect of political and economic debate in the wake of rapid economic and technological change and recurrent crises in global economy. In this context, the study of the relationship between performance of corporations and corporate governance vis-à-vis globalisation assumes considerable significance. The distinction between developing and the developed countries exists on the capacity of these countries to fashion complex institutional frameworks and enforceable legal relationships among the management and ownership.

Globalisation is more a syndrome than a unified process or phenomenon. As such, it is considered as a set of political economic development. The entire process has been immensely helped by the development of communication and information technologies.