Introduction
In this paper, I discuss the main issues and reasons because of which large public companies need the proper corporate governance system in the late 1980 and after. If we look upon the history or evolution of corporate governance, it affected by lot of events held in the whole World. As a result of series of corporate shocks in the 20th century, staring with East Asian and Russian financial crises and followed by series of corporate governance scandals in Europe and the United States. These countries introduced new changes and reforms in corporate governance system.
By definition corporate governance is
• “Corporate governance is about the way in which boards oversee the running of a company by its managers, and how board members are in turn accountable to shareholders and the company.”
• “A jargon term for the fashionable issue of how companies should be run in the context of society as well as the law and best practice.”
Corporate governance before 1980
Before 1980, the main aim of corporate management is to think of themselves not the shareholders. In this view, they tried to grow the firm by “balancing” the claims of all major “stakeholders”--employees, creditors and local communities. 4 This is the fact that in majority of countries of the world, the corporate governance was a major problem before 1980.Claessens et al. (2000), Khanna and Rivkin (2001) and many others found the reasons of bad corporate governance like the ubiquity of family controlled corporate groups in poor countries as well as in some rich countries.
The main issues that triggered for good corporate &nbs ...