Corporate Governance that ‘Works for Everyone’: Promoting Public Policies Through Corporate Governance Mechanisms

40 Pages Posted: 5 Jan 2018

See all articles by Barnali Choudhury

Barnali Choudhury

University College London - Faculty of Laws

Martin Petrin

University College London - Faculty of Laws

Date Written: January 2018

Abstract

Corporate governance mechanisms are traditionally seen as devices for reducing agency costs between shareholders and managers in the context of private ordering. More recently, however, the UK and other governments have embraced regulations in the field of corporate governance as tools through which to impose public responsibilities on corporations. Among others, corporate governance mechanisms have been relied on to equalise wealth distribution, promote equality in the labour force, and pursue environmental goals. This article assesses the justification, utility, and efficacy of using corporate governance to promote public aims. It finds that while it may be appropriate for corporate governance mechanisms to include public goals, the current overreliance on disclosure requirements and on indirect regulation to address societal issues is misguided. Instead, the article suggests that governments should view corporate governance mechanisms with public policy goals as complementary strategies, and not as substitutes, to direct external regulation.

Keywords: Corporate governance, corporations, executive remuneration, disclosure, board diversity, stakeholderism, nexus of contracts, corporate purposes, shareholder wealth maximization, public policy

JEL Classification: K00, K13, K14, K22

Suggested Citation

Choudhury, Barnali and Petrin, Martin, Corporate Governance that ‘Works for Everyone’: Promoting Public Policies Through Corporate Governance Mechanisms (January 2018). Available at SSRN: https://ssrn.com/abstract=3095249 or http://dx.doi.org/10.2139/ssrn.3095249

Barnali Choudhury (Contact Author)

University College London - Faculty of Laws ( email )

Bentham House, Endsleigh Gardens
London, WC1E OEG
United Kingdom

Martin Petrin

University College London - Faculty of Laws ( email )

London WC1E OEG
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Downloads
151
Abstract Views
756
rank
197,446
PlumX Metrics