corporate governance relevance in 21st century
Ajay K Pandey,Dr. Deependra Sharma
Published in International Journal of Advanced Research in Business Management and Administration
ISSN: 2348 -2354 Impact Factor:1.48 Volume:1 Issue:1 Year: 02 April,2016 Pages:154-163
Abstract
Purpose of study: • To understand the inherent principles and evolving framework of corporate governance theories • To assess the relevance of corporate governance theories in modern organizations. Research-Methodology: Data from the secondary sources have been utilised to attain the objectives of the study. Extensive review has been made of the extant literature by the researchers. The paper studies various conceptual frameworks of Corporate Governance theories and critically examines their relevance so as to provide integrated, comprehensive model of Corporate Governance. The study suggests that unifying Corporate Governance model should take ‘organisations as an organism’ with an aim of creating maximisation of long term strategic value for it, so as to ensure longevity and growth for the organisation. Results: The goal of Agency Theory is to maximize shareholders value in long term, but this goal is not always valid particularly when the interest and decisions of Board of Directors are in conflict, in that situation Stakeholders Theory and Stewardship Theory becomes valid which ensures alignment of interests. For modern organization the concept of organization as organic entity is the valid theoretical framework for decision making function of Board of Directors, this concept is based on growth and longevity of the organization as the prime goal of organizations. Implications: Results of the study are of relevance not only to the academician but to practioners as well. It suggests what model of Corporate Governance should be followed by an organisation to create maximum value and how it may ensure longevity and growth on a sustainable basis.
Kewords
Corporate Governance, Agency Theory, Stakeholder Theory, Stewardship Theory.
Reference
1) Ansoff, H.L 1987, Corporate Strategy, London, Penguin. 2) Argyris, Chris 1975, “Some limits of rational man organizational theory”, Public Administration Review, Vol. 33.3, pp 253,267. 4) Bennis, W&O’ Toole, J 2000, Don’t hire the wrong CEO, Harvard Business Review, 2000. 5) Berle, A.A and G.C. Means 1932, The Modern Corporation and Private Property, Brunswick, NJ Transaction Publishers.
