Six Components of Corporate Governance that Cannot Be Ignored

Six Components of Corporate Governance that Cannot Be Ignored

Joseph McCahery, Erik Vermeulen

Series number :

Serial Number: 
248/2014

Date posted :

March 01 2014

Last revised :

March 19 2014
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Keywords

  • board of directors • 
  • CEO • 
  • conglomerate • 
  • controlling ownership • 
  • corporate culture • 
  • Corporate governance • 
  • corporate group • 
  • innovation • 
  • investor conference • 
  • investor relations • 
  • one-size-fits-all • 
  • shareholder engagement • 
  • widely dispersed ownership

Recent regulatory initiatives that attempt to encourage shareholder engagement, ensure board independence and improve the operation and transparency of corporate groups are of great interest to both academics and practitioners. These initiatives reflect a ?one-size-fits-all?

approach that may lead to disappointing and counterproductive results and could destabilize and disrupt workable arrangements between management, the board of directors and investors. In this paper, we take a different perspective by showing how there is more to corporate governance than just providing protection to investors and other stakeholders. An important reason for corporate governance is that it also facilitates companies to be innovative, create value and maintain a competitive advantage. To show this, this paper focuses on six components that successful and innovative companies have in common. We support our argument with case studies to show how these companies have found different ways to give substance to the six components.

Authors

Research Member
Tilburg University Faculty of Law and Tilburg Law and Economics Center
Real name: 
Erik Vermeulen
Academic Member
Tilburg University