Role of Corporate Governance and the Furtherance of Globalization
Presently, we must consider the cultural context of a corporation’s day to day practices in order to more precisely determine the success and effectiveness of that particular corporation’s governance mechanisms. Success, in this reference, deals with encouraging potential shareholders to invest with the expectation of receiving a commensurate return. Furthermore, one company might have more than one cultural context scenario to consider in this, the advent and development stage of a global economy.
Many studies have approached the issue of corporate governance system as a bipolar issue. Setting up the comparison as a U.S., or Anglo-American, model versus the non Anglo-American model, some studies fail to recognize the evolution of corporate governance mechanisms that address special national issues. To be successful within restricted cultural markets, a corporation might operate according to a particular governance mode; however, success in the world market will require convergence of, perhaps several, more successful sets of corporate governance approaches. Effective guidance through efficient corporate governance will ensure greater stability for markets in emerging countries and will maintain and improve shareholder investment and activism in established markets.
Indeed, knowing that an investment will not be expropriated encourages investor participation in the market, and investor participation encourages growth in the market. As measures of corporate governance move to full disclosure and transparency in accounting, trust in investing in emerging markets should flourish, inducing the further development of globalization. This line of thinking is somewhat farsighted, though. ...