Corporate governance: from accountability to enterprise

Abstract

This paper discusses the development of the corporate governance debate in the UK since the formation of the Cadbury Committee to the recent reports of the Hampel Committee within the context of a general corporate governance framework. It identifies the changing emphasis in this period between accountability and enterprise aspects of governance. The literature relating to accountdbihty and enterprise is reviewed in terms of the key areas of governance (board structure, directors' remuneration, directors' ownership, institutional shareholders; auditors, auditing and accounting information; and the market for corporate control). Issues of substitutability and complementarity of governance mechanisms are also examined. The paper argues that although there has been a shift in emphasis towards enterprise, there is a need for further rigorous UK-based research to underpin this development. Areas for future research are identified.

Impact of Innovation and Places on Corporate Governance the Case of Wind Turbine Production

“…This study also contributes to prior research challenging the accountability perspective on corporate governance (Filatotchev & Short et. al.…”

“…Audretsch (1995) and Toms and Filatotchev (2005) associate this task with conflicts concerning strategies. We argue that the evolution of corporate governance depends on how the task to protect the integrity is performed and agree with Short et al (1999) and Filatotchev and Wright (2005) that scholars usually overstate the task to monitor management. In doing that, they neglect shareholders' concern regarding the business value deriving from the control over internal knowledge assets and the company growth potential.…”

“…The authors do not raise the question about which type of quality the board directors must have to express the perspectives of the different value-creating stakeholders, when the stakeholders are more or less tied up to a geographic place. Short et al (1999) conclude that outside directors may ignore the enterprise aspects of governance. Inside directors are more inclined to promote innovation strategies based on internal technological competencies.…”

“…Increased firm growth increases the demand for financing, which cannot be satisfied without changes in the ownership structure. Corporate control moves from insiders to external investors (see Clark 2007) and corporate governance changes from pursuing enterprise aspects to an accountability perspective (Short et al 1999), (Filatotchev & Wright 2005). Yet, it seems as if existing research does not address changes in governance to the extent they deserve.…”

“…The share of human capital is significant in most companies and the replacement of physical capital by its human counterpart implies a qualitative change in corporate financing that has triggered scholarly discussions about the appropriateness of the shareholder value model that stresses the accountability perspective on corporate governance (monitoring and control) (Rajan & Zingales 2000). In writing this article, we have been inspired by Short et al (1999) and Filatotchev and Wright (2005) who move the corporate governance focus away from the accountability perspective by suggesting approaches that encompass the enterprise aspects of governance. Before investing in a company, owners and investors carefully deliberate the business value that is derived from the development of the internal resources and the growth potential.…”