A Decision Dynamics Model of Cost Control and Corporate Governance
The Journal of Developing Areas, Volume 49, Number 2, pp. 397-405, Spring 2015
10 Pages Posted: 4 Jan 2015
Date Written: January 3, 2015
This study is an attempt to develop a conceptual decision dynamics model in order to analyze the relationship between cost control and corporate governance. The model discusses why it is important to uphold the shareholders' interests and minimize the destructive events that usually occur in corporate cultures. This study argues that corporate governance must help retain the best interests of all the internal and external stakeholders and safeguard organizational resources from misuse, abuse, or practice of self-interests of the managers. It also argues that since protecting an organization’s interest requires protecting the interests of all stakeholders, cost control by that organization should be well guided by the corporate governance principles in ways that provide strongest safeguard of interests of all those stakeholders. Thus, a sound corporate governance policy requires adopting the standards and mechanisms that would maximize stakeholders’ financial and non-financial interests. This study concludes that cost control and corporate governance must operate in pragmatic ways in order to improve efficiency and foster capabilities of the organization and to protect simultaneously the interests of all the stakeholders.
Keywords: decision dynamics, cost control, corporate governance, stakeholders’ interest
JEL Classification: G31; G34; M14; O16
Suggested Citation: Suggested Citation