The Dramatic Changes in Corporate Governance

Due to the evolution of technology and business, the corporate business model, as well as how it is regulated and ruled, has changed dramatically over the past several decades, with some of the most remarkable changes taking place over the last decade or so. While the United States has been a pacesetter in corporate governance, as it has come to be known, and indeed many other nations have followed the American model, there are still areas of corporate governance that need to be addressed. The focus of this paper will be the fact that the world is converging on the American system of corporate governance as well as some of the implications of that practice.

Corporate Governance Defined and Explained

Before the adaptation of any form of corporate governance by any nation can be discussed, it is first essential to have a basic definition of corporate governance and an understanding of exactly how and why corporate governance came about originally. In terms of a basic definition, corporate governance can best be described as a system of directly administrating and controlling a corporation (Kakabadse, 2001) ; this governance is usually delivered and administered day to day by the director or board of directors of a corporation, in conjunction with the management team of the organization. The objective, in a perfect world scenario, is to echo the sentiments of the shareholders and/or stakeholders in an organization, and to follow the bylaws of the organization in order to facilitate ethical business practices, efficient management of the company, and sustained shareholder value. While this may be the perfect world scenario, there are recent instances, especially in the United States, where the perfect world was disregarded in favor of the personal agendas and greed of a select few in the power structure of American corporate giants like Enron and WorldCom. For this and other reasons that will now be discussed, the American system of corporate governance is like no other.

Distinction of American System of Corporate Governance