Corporate Governance and Accountability

The 2008 financial crisis calls for a re-examination of the basic premise of the orthodox shareholder-oriented model of the corporate firm and its governance. This book tries to meet this challenge. It posits that the primary raison d'être of business corporations is the organization of associative cognitive and physical actions to create corporate values broader than shareholders' values. It identifies five generic modes of organizational architecture distinguished by discrete combinations of human cognitive assets among management and workers, as well as their relationships to use-control rights of physical assets that are provided by the investors. For each of those architectural modes, a particular governance structure is associated as an essentially self-enforcing agreement among the three types of asset-holders. The selection of a corporate form from the possible varieties is evolutionarily conditioned and institutionally linked to stable outcomes of social and political games in which corporations are embedded and play. The book looks at the nature of the evolving diversity of the global corporate landscape and the rising importance of CSR, which contribute to the accumulation of corporate social capital. This evolving state appears to require the redefinition of the role of financial markets as informational, and governance infrastructures that are complimentary to diverse corporate organizations, rather than as dominant principals of corporations.

This is a book about shareholders — who they are, what they own, how their composition and character has changed, and with it their relationship with the companies they own. It is also a book about shareholder rights and responsibilities. The book explores the key current corporate governance issues — company law and reporting, chief executive pay, regulatory and accountability requirements — against the background of an ever-changing business environment: an environment in which private investors may have grown in number, but in which shareholders influence has dwindled as institutions have become the dominant shareholding group. Throughout the book provides numerous examples and anecdotes illustrating the evolution of the joint stock company from the South Sea Company of the 18th century to the giants and cause celebres on the corporate stage in the 1980s and 1990s.

This book offers a fresh perspective on ethics at work, questioning the notions that doing ethics at work has to be work, and that work is somehow a sphere where a different set of rules applies. When we separate ethics from life, we put it beyond our daily reach, treating it as something that is meaningful only at certain moments. This problem permeates our everyday talk about ethics at work, in popular culture, in our textbooks, and even in our ethics codes. This book uses insights from the fields of communications and rhetoric to show how in the very framing of ethics—even before we get to specific decisions—we limit the potential roles of ethics in our work lives and in the pursuit of happiness. Sayings such as “It's just a job” and “Let the market decide” are two examples of demonstrating that our perspective on professional ethics is shaped and reinforced by everyday language. The standard “bad apples” approach to dealing with corporate and governmental wrongdoing is not surprising; few people are willing to consider how to cultivate “the good orchard.” The book argues that ethics is about more than behaviour regulation, spectacular scandals, and comprehensive codes. The authors offer a new take on virtue ethics, referencing Aristotle's practical ideal of eudaimonia, or flourishing, allowing us to tell new stories about the ordinary and to see the extraordinary aspects of professional integrity and success.

How should companies be organised? To whom should boards of directors be responsible — shareholders, or a wider group of stakeholders? In this fiercely competitive world we cannot judge our own system of corporate governance in isolation; it must bear comparison with the best. The second edition of this book aims to do just that. Since publication of the first edition interest in corporate governance has greatly increased, codes have proliferated, and principles laid down nationally and internationally. The author describes developments in the system of corporate governance — both the business environment and the particular structures of company organisation — in five major industrial countries: Germany, Japan, France, the USA, and the UK. This second edition is fully revised, updated and expanded, and includes a new conclusion looking at a number of ongoing issues in corporate governance, and an appendix discussing the role of international organisations.

Normal Organizational Wrongdoing critically reviews theory and research on wrongdoing in and of organizations, focusing on the individual level of analysis. The book considers a wide variety of organizational misconduct, including corporate crime, white-collar crime, unethical behaviour, and socially irresponsible behaviour. It begins by developing an overarching framework for classifying existing theories of organizational wrongdoing. Then it uses this framework to guide its presentation, evaluation, and extension of theories currently in use in the field. The overarching framework distinguishes between two broad classes of theories of wrongdoing; one, shared by most students of wrongdoing, considers wrongdoing an abnormal phenomenon and the other, championed by the author, considers wrongdoing a normal occurrence. Two existing explanations of wrongdoing, the rational choice and culture accounts, fall into the former category. Four existing theories, the administrative system, situational social influence, power structure, and accidental accounts, fall into the latter category. One current theory, the behavioural decision account, serves as a bridge between the two approaches. The book's overarching framework also suggests the need for an eighth explanation of organizational wrongdoing that has largely been overlooked to this point, the social control account. The theoretical arguments advanced in the book are illustrated by rich case studies of instances of organizational wrongdoing. The book concludes with a discussion of the practical implications that the theory reviewed and developed in the book holds for those seeking to curb wrongdoing in and of organizations.

Before a nation can produce, it must achieve social peace. That social peace has been reached in different nations by differing means, some of which have then been embedded in business firms, in corporate ownership patterns, and in corporate governance structures. The large publicly held, diffusely owned firm dominates business in the United States despite its infirmities, namely the frequently fragile relations between stockholders and managers. But in other economically advanced nations, ownership is not diffuse but concentrated. It is concentrated in no small measure because the delicate threads that tie managers to shareholders in the public firm fray easily in common political environments, such as those in the continental European social democracies. Social democracies press managers to stabilize employment, to forego some profit-maximizing risks with the firm, and to use up capital in place rather than to downsize when markets no longer are aligned with the firm's production capabilities. Since managers must have discretion in the public firm, how they use that discretion is crucial to stockholders, and social democratic pressures induce managers to stray farther than otherwise from their shareholders' profit-maximizing goals. Moreover, the means that align managers with diffuse stockholders in the United States-incentive compensation, hostile takeovers, and strong shareholder-wealth maximization norms-are weaker and sometimes denigrated in continental social democracies. Hence, public firms there have higher managerial agency costs, and large-block shareholding has persisted as shareholders' best remaining way to control those costs. Social democracies may enhance total social welfare, but if they do, they do so with fewer public firms than less socially responsive nations. The book therefore uncovers not only a political explanation for ownership concentration in Europe, but also a crucial political prerequisite to the rise of the public firm in the United States, namely the weakness of social democratic pressures on the American business firm.

Once just a slogan used by corporate PR departments, the idea of corporate social responsibility (CSR) has now become a serious business for many firms and a major object of academic research. It is also a field replete with disagreement and diversity of opinion. Some corporations try to solve these dilemmas by projecting an image that is ‘responsible’ in specific and often isolated ways. This volume, based on a conference organized jointly by the Social Trends Institute and the University of Warwick Business School, takes the debate a stage further by examining the place of CSR in the role played by major corporations within global economic governance. One of the principal tasks in this volume is to bring the study of CSR into political science debate. Accordingly, authors from varied and even opposed perspectives consider what defines a ‘responsible’ corporation in today's global economy whilst a few authors discuss the limits to CSR and asks whether this approach is an appropriate means to address issues in the global ‘public’ domain in the first instance.

Recent events around the world, especially in the financial sector and with respect to government performance, have severely undermined people’s trust in both private organizations and public institutions. In no small measure, these substantial and enduring declines in trust reflect widespread disenchantment with the leadership of such organizations and institutions. In recognition of this pervasive problem, policymakers and scholars alike have argued the need to restore trust in our organizations and their leadership. But precisely how to restore trust is less evident and often unspecified in these exhortations. The present volume addresses this important and timely issue by assessing the state of social science theory and evidence regarding effective trust repair. The volume presents multi-disciplinary perspectives, including insights from social psychology, organizational theory, and behavioral decision theory. The first part of the volume examines some of the reasons why trust and its restoration are problematic from a variety of perspectives. The second part of the volume examines constructive approaches for restoring trust, including psychological and structural perspectives.