A Critique of the Anglo-American Model of Corporate Governance

34 Pages Posted: 30 Jul 2009  

Thomas Clarke

University of Technology, Sydney

Date Written: July 29, 2009

Abstract

There is a developing literature comparing different models of capitalism from alternative analytical frameworks highlighting the strengths and weaknesses of diverse forms of capitalism, and the prospects for institutional diversity when confronted with growing pressures for international economic integration.

This paper examines how different varieties of capitalism produce different levels of inequality. Specifically how the Anglo-American variant of corporate governance in its US manifestation afforded CEOs of large corporations inordinate power and wealth, and the consequences of this for inequality in wider society. Arrogation of an increasing share of the wealth of corporations by CEOs impacts upon relationships with other stakeholders and displaces CEOs objectives. The significance is that this is precisely the model of capitalism that is being propagated vigorously throughout the world.

This dynamic induced the present international financial crisis, in which investment bank executives were massively incentivised to pursue vast securitization and leverage which hugely enriched themselves, but caused the collapse of financial institutions worldwide, the violent instability of financial markets, substantial damage to the real economy, and impacted severely on the employment security and living standards of working people.

Keywords: Anglo-American Corporate Governance

JEL Classification: P16, P12

Suggested Citation

Clarke, Thomas, A Critique of the Anglo-American Model of Corporate Governance (July 29, 2009). CLPE Research Paper No. 15/09. Available at SSRN: https://ssrn.com/abstract=1440853 or http://dx.doi.org/10.2139/ssrn.1440853

Thomas Clarke (Contact Author)

University of Technology, Sydney ( email )

Haymarket Campus
PO BOX 123 Broadway
Sydney, New South Wales 2007
Australia
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+61 2 9514 3817 (Fax)

HOME PAGE: http://www.ccg.uts.edu.au

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