Corporate Governance International, Vol. 6, No. 3, pp. 4-14, September 2003
9 Pages Posted: 7 Mar 2004
This paper explains why so called "world best practices" in corporate governance developed in the US and the UK represent the problem not the solution for the crisis in capitalism that has reduced share values by trillions of dollars. One reason is that a unitary board has absolute power to manage its own conflicts of interest to allow absolute corruption. Another reason is that directors have no systemic process to obtain independently of management, the information, will and capability to act to protect themselves, shareholders and stakeholders. Nor do directors have a systemic process to discover if their trust in management might be misplaced. Shareholders have the power to correct these problems by changing corporate constitutions to introduce stakeholder communications networks to minimise the control of information by management. Also, to separate the power to manage from the power to govern to provide checks and balances to minimise and/or manage conflict of interests.
Keywords: Directors, Division of powers, Governance, Networks, Stakeholder Councils, Trust, Watchdog boards
JEL Classification: D72, D74, D82, G34, G38, K22, L29
Suggested Citation: Suggested Citation