Six Components of Corporate Governance That Cannot Be Ignored
Joseph A. McCahery
Tilburg University - School of Law; European Banking Center (EBC); European Corporate Governance Institute (ECGI); Duisenberg School of Finance; Tilburg Law and Economics Center (TILEC)
Erik P. M. Vermeulen
Tilburg University - Department of Business Law; Philips International BV; Tilburg Law and Economics Center (TILEC); Kyushu University - Faculty of Law
March 9, 2014
Lex Research Topics in Corporate Law & Economics Working Paper No. 2014-2
European Corporate Governance Institute (ECGI) - Law Working Paper No. 248/2014
Tilburg Law School Research Paper No. 08/2014
Recent regulatory initiatives that attempt to encourage shareholder engagement, ensure board independence and improve the operation and transparency of corporate groups are of great interest to both academics and practitioners. These initiatives reflect a ‘one-size-fits-all’ approach that may lead to disappointing and counterproductive results and could destabilize and disrupt workable arrangements between management, the board of directors and investors. In this paper, we take a different perspective by showing how there is more to corporate governance than just providing protection to investors and other stakeholders. An important reason for corporate governance is that it also facilitates companies to be innovative, create value and maintain a competitive advantage. To show this, this paper focuses on six components that successful and innovative companies have in common. We support our argument with case studies to show how these companies have found different ways to give substance to the six components.
Number of Pages in PDF File: 44
Keywords: board of directors, CEO, conglomerate, controlling ownership, corporate culture, corporate governance, corporate group, innovation, investor conference, investor relations, one-size-fits-all, shareholder engagement, widely dispersed ownership
JEL Classification: G01, G32, G34, K20, K22, L22, L25, M14, O16
Date posted: March 10, 2014 ; Last revised: May 26, 2014
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