CORPORATE GOVERNANCE & ETHICS

Corporate Governance & Ethics- Marks & Spencer



Corporate Governance & Ethics- Marks & Spencer

Overview of governance theories

The general approach of corporate regulations and corporate governance focuses on the aspect of the delinquent activities of the directors of a company in order to curb their activities. The meaning of the approach is to examine the functions of the broad of directors of the company and introduce the aspect of corporate governance into the culture and structure of the organization. There are various theories that relate to the firm's corporate governance. There are different legal systems that are adhered while the corporate governance is implemented within the culture and structure of the organization.

The economic theory of the firm relates to the corporate governance of the companies. The development of democracy in the United States created an environment of free market approaches and an economic system in which the free market system of capitalism was prevalent. The success and progression of capitalism lead towards the enhancement of more opportunities for the businesses in the global world and they even expanded larger. One such driver in the growth of the economy and the opportunities that lead to the growth of the industry and the company was the chance for them to merge their capitals with each other and provide them findings to the larger projects that requires more funds to be established and includes massive enterprises. The investors in those projects received the shares and portions of the businesses where they invested and they were called as the shareholders of the company. However, the massive businesses funded by the capitalist lack the governance by appropriate partners or proprietors due to many issue and reason. The process was then converted to the separation of the contract of ownership. By the 20th century, the corporations that were publicly owned were developed as the business enterprises having dominant legal forms. Progression in the context leads towards another resolution of the issue. The concern was overseen by the highest judicial body in the United Kingdom. They proposed that the individual investors could manage their affairs pertaining to the governance of the organizations in the way they want it to manage and organize and they were entitled to protect the limited liability of the corporation as long as the corporation tend to be in accordance with the proposed and devised formal rules pertaining to the relevant legislation (Ping & Andy, 2011).

Another general approach towards governance is the agency theory approach. The emergence of interest in the area of corporate governance and the drive that resulted in the setting up of global standards of corporate governance were merged with the current increase of spectacular nature in the area of shareholdings concentrations that are in control of the large investors and institutions. The assumption in the agency theory approach determines that the neoclassical economic theory is the basis for the governance under the agency theory approach. They underlying the assumption that the portrays in a contract will ...