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Dangerous frontiers in corporate governance

Published online by Cambridge University Press:  28 August 2014

Thomas Clarke
Thomas Clarke*
Affiliation:
UTS Business School, Centre for Corporate Governance, UTS Sydney, Australia
*
Corresponding author: Thomas.Clarke@uts.edu.au
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Abstract

The historical evolution of corporate governance is considered, highlighting the different eras of governance, the dominant theoretical and practical paradigms, the reformulation of paradigms and counter paradigms. Two alternative and sharply contrasting theorizations, one collective and collaborative (the work of Berle and Means), the other individualistic and contractual (agency theory and shareholder value) are focused upon. The explanatory potential of Blair and Stout's team production theory is elaborated, and its conception of the complexity of business enterprise, with a mediating hierarch (the board of directors) securing a balance between the interests of different stakeholders. The potential for reform of corporate purpose, corporate governance and directors’ duties is examined with reference to the UK Modern Company Law Review. The impact of the intensification of the financialization of corporations is analysed, with the increased emphasis upon short-termism. The origins of the global financial crisis in shareholder value orientations and the continuing reverberations of the crisis are explored. Finally, the imperative of the advance of sustainable enterprise is argued, and the critical changes necessitated in corporate purpose and directors’ duties.

Keywords

directors's dutiesagency theory and shareholder valueteam production theoryfinancializationshort-termismsustainability
Type
Invited Article
Information
Journal of Management & Organization , Volume 20 , Issue 3 , May 2014 , pp. 268 - 286
Copyright
Copyright © Cambridge University Press and Australian and New Zealand Academy of Management 2014 

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