ABSTRACT OF PAPER
Title: On the Concept of Corporate Governance
Author: Aldrighi Dante
This paper aims at exploring some divergences in the way of conceptualising corporate governance and the reasons for the current widespread application of this concept within as well as outside the academia to unravel a broad range of economic occurrences. Economists have overwhelmingly associated this term with the mechanisms by which, as Shleifer and Vishny put it, “suppliers of finance to corporations assure themselves of getting a return on their investment”, emphasising therefore the scope for managerial opportunism at the expense of shareholders. Yet this clear-cut meaning has been questioned by a significant number of finance scholars on the grounds that it is too restrictive and takes for granted that maximising shareholder value is tantamount to maximising firm wealth. Some of them argue that should firms’ goal be circumscribed to meet exclusively shareholders’ interests, non-owner stakeholders could lack the incentives for undertaking firm-specific investments, leading firms to sub-optimal performance. As a case in point, Zingales (1998, p. 498) understands corporate governance as “the complex set of constraints that shape the ex post bargaining over the quasi-rents generated by a firm.” In the same vein, Tirole (2001) defines corporate governance, “perhaps unconventionally for an economist, as the design of institutions that induce or force management to internalize the welfare of stakeholders.” It is noteworthy that whereas the endeavour to make out a case for incorporating into the concept of corporate governance the interests of stakeholders other than shareholders was at the beginning mainly undertaken by “unorthodox” economists, now some renowned mainstream economists have begun to discuss that approach. The other issue to be addressed is why references to the term “corporate governance”, which were scant before the mid-1980s, have since then grown exponentially and employed to deal with an ample spectrum of economic phenomena. The concept appears for the first time in the American Economic Review in 1995, had no entry in the 1987 New Palgrave Dictionary of Economics, and before 1990 references to the term in the two most prestigious academic journals specialised in Finance were made only in a paltry number of papers.
Registred web users only can download this paper - Go back
Please note that files available for download have not been checked for viruses. These files have been submitted by authors of the conference to this web site. Conference organisers can't accept any responsibility for damages caused to users by downloading such files.