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Minggu, 01 April 2012

Fundamental and Ethics Theories of Corporate Governance

by : Haslinda Abdullah
Published : EuroJournals Publishing, Inc. Middle Eastern Finance and Economics
ISSN: 1450-2889 Issue 4 (2009).

History has revealed that there is a never-ending evolution of theories or models of
corporate governance. One of the reasons is due to the very essence of social consciences
that is minimal and profit making took center stage. All over the world, companies are
trying to instill the sense of governance into their corporate structure. With the surge of
capitalism, corporation became stronger while governments all over the world had to
succumb to its manipulations and dominance. Hence, this article is a review of literature on
the range of theories in corporate governance. The fundamental theories in corporate
governance began with the agency theory, expanded into stewardship theory and
stakeholder theory and evolved to resource dependency theory, transaction cost theory,
political theory and ethics related theories such as business ethics theory, virtue ethics
theory, feminists ethics theory, discourse theory and postmodernism ethics theory.
However, these theories address the cause and effect of variables, such as the configuration
of board members, audit committee, independent directors and the role of top management
and their social relationships rather than its regulatory frameworks. Hence, it is suggested
that a combination of various theories is best to describe an effective and good governance
practice rather than theorizing corporate governance based on a single theory.
Keywords: Corporate governance, theory, ethics
1.0. Introduction
Corporations have become a powerful and dominant institution. They have reached to every corner of
the globe in various sizes, capabilities and influences. Their governance has influenced economies and
various aspects of social landscape. Shareholders are seen to be losing trust and market value has been
tremendously affected. Moreover with the emergence of globalization, there is greater
deterritorialization and less of governmental control, which results is ... (baca_selengkapnya )

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