Browse

Accounting is the language of business, increasingly standardized across the world through global banks and corporations: a technical tool used to reach the correct, unquestionable answer. Nonetheless, as recent corporate scandals have shown, a whole range of financial professionals (accountants, auditors, bankers, finance directors) can collectively fail to question dubious actions. How is this possible? To understand such failures, this book explores how accountants construct the technical knowledge they deem relevant to decision-making. In doing so, it not only offers a new way to understand deviance and scandals, but also suggests a reappraisal of accounting knowledge which has important implications for everyday commercial life. The book's findings are based on interviews with chartered accountants working in the largest accountancy practices in London. The interviews reveal that although accounting decisions seem clear after they have been made, the process of making them is contested and opaque. Yet accountants nonetheless tend to describe their work as if it were straightforward and technical. This book delves beneath the surface to explore how accountants actually construct knowledge, and draws out the implications of that process with respect to issues such as professionalism, performance, transparency, and ethics. This thought-provoking book concludes that accountants' technical discourse undermines their ethical reasoning by obscuring the ways in which accounting decisions must be thought through in practice. Accountants with particular ethical perspectives more readily understand and construct particular types of knowledge, so the two issues of knowledge and of ethics are inseparable. Increasingly technical accounting rules can therefore be counterproductive. Instead, this book shows how reinvigorating the ethical discourse within the financial world could be a more effective means of averting future scandals.

This book provides a coherent overview of the most important theories and insights in the field of business ethics, together with a substantiated development of ethical norms and values with which organizations must comply. At the end of each chapter is a case study (e.g., Shell, KPN Telecom, IHC Caland, Herald of Free Enterprise disaster, etc.), ideal for graduate courses in business ethics and corporate social responsibility.

In the 1970s global financial markets were controlled by governments, compartmentalized along national boundaries and segregated according to the particular activities they engaged in. All that disintegrated in the decades that followed under the pressure of market forces, global integration, and a revolution in the technology of trading. However, none of the outcomes were inevitable despite the forces at work. Instead, they were the product of decisions taken at the time for a variety of reasons. Banks, exchanges, and regulators were faced with unprecedented challenges and opportunities, as a revolution swept away traditional ways of conducting banking, the methods used to trade in financial markets, and the rules and regulations employed to enforce discipline. One outcome of the scale and pace of the changes that took place was the Global Financial Crisis of 2008, which exposed the fragility of the new structures created. Since then new structures have been put in place and they were put to the test by the consequences of the coronavirus epidemic of 2020. Global financial markets are never at rest and this book captures that world through the perspective of banks, exchanges, and regulators. Nothing like it has been attempted before.

Boards of directors are coming under increasing scrutiny in terms of their contribution in monitoring and controlling management, particularly in the wake of high-profile corporate frauds and failures, and also their potential to add value to organisational performance through involvement in the strategy process and through building relationships with key investors. Despite the importance of these issues, not only to organisations, but also arguably to national competitiveness, the nature of board activity remains largely a black box, clouded by prescriptions, prejudices, and half-truths. This book responds to calls for greater scrutiny of boards of directors with an in-depth examination of directors of organisations in the United Kingdom, drawing on the accounts of directors themselves as to their roles, influence, and the potential and limits to their power. The study shows that boards, in many cases, are far more than passive rubber stamps for management and that non-executive directors are encouraged to act as trusted advisers to the executives and the chief executive officer, rather than solely monitors of executive activity. Boards are important mechanisms in maintaining the strategic framework of the organisation through setting the boundaries of organisational activity. The potential of the non-executive board members to fulfil such a mandate depends on a number of factors, including ability, willingness to engage with the organisational issues, and the degree of knowledge they have relevant to the host firm. Above all, the degree of trust built between members of the board, and between the board and key external constituencies, is at the heart of effective board behaviour.

The Committee on the Financial Aspects of Corporate Governance, better known as the Cadbury Committee, was set up in May 1991 to address the concerns increasingly voiced at that time about how UK companies dealt with financial reporting and accountability and the wider implications of this. The Committee was sponsored by the London Stock Exchange, the Financial Reporting Council and the accountancy profession. It published its final report and recommendations in December 1992. Central to these was a Code of Best Practice and the requirement for companies to comply with it or to explain to their shareholders why they had not done so. The recommendations and the Code provided the foundation for the current system of corporate governance in the UK and have proved very influential in corporate governance developments throughout the world. While academics and practitioners have explored and discussed the developments in corporate governance since 1992, little attention has been paid to the processes of code and policy development. This book explores the origins of the Committee, provides rich insights in to the way in which it worked and documents the reaction to the publication of the Committee’s report. The issues which the Committee addressed are still of great concern: the complex relationships through which corporations are held to account have profound effects on all our lives. The Committee provided a framework for thinking about these issues and established a process through which such thinking could be articulated and continue to evolve. This book represents a major contribution to the history of the development of UK corporate governance in the late twentieth century: the why, how, what and when of corporate governance development.

Our quest for prosperity has produced great output but not always great outcomes. The list of concerns is growing and familiar. Fundamentally, when it comes to well-being, fairness, and the scope of our humanity, the modern economic system still leaves much to be desired. In turn, trust in business and the liberal market system (aka “capitalism”) has been declining and regulation has been rising. A variety of forces—civic, economic, and intellectual—have been probing for better alternatives. The contributions in this volume, coauthored by eminent philosophers, social scientists, and a handful of thoughtful business leaders, are submitted in this spirit. The thrust of the work is conveyed in the volume’s titular question: Capitalism Beyond Mutuality? Mutuality, or the exchange of benefits, has been established as the prime principle of interaction in addressing the chronic dilemma of human interdependence. Mutuality is a fundament in the social contract approach and it serves us well. Yet, to address the concerns outlined here, we must help evolve an economic paradigm where mutuality is more systematically complemented by reasoned and elective morality. Otherwise the state will remain the sole (if inadequate) protector and buffer between market and society. Hence, rather than just regulate power we must also educate power. Philosophy has a natural role, especially when education is the preferred vehicle of transformation. Accordingly, the essays in this volume integrate philosophy and social science to outline and explore concrete approaches to these important concerns emanating from business practice and theory.

When two parties quarrel, the third rejoices, according to a well-known proverb. This book highlights the role of rejoicing “profiteers” in political efforts to expand market-based competition. Marketization appears puzzling if it is conceptualized as a political struggle between the established incumbents and their challengers, or between producers and consumers. Challengers and consumers often lack the resources to overcome barriers to market entry, and collective action problems afflict both groups. Why, then, do incumbents fail to protect their turf? The present book resolves this puzzle by casting light in a new direction, toward those who profit from a contest while remaining above the fray. The rejoicing band of profiteers grows alongside the arena of competition. Once the suppliers of market support services have established themselves on the sidelines of a contest, they accumulate resources that help them expand that arena further. Political struggles surrounding the gradual marketization of corporate control in Britain, Germany, and France from the 1860s onward provide empirical illustration. The book maps and analyzes the path-dependent evolution of support for shareholder rights relating to takeover bids among key interest groups, including managers, creditors, shareholders, and takeover service providers, as well as among political parties. By comparing the self-reinforcing and self-undermining policy feedback of market-enabling and market-restraining rules, it helps explain why market containment is an uphill struggle, while market expansion becomes easier with time.

Corporate governance has become a major topic of interest for academics and policymakers in recent years. The advent of major financial scandals in the early 2000s (Enron, WorldCom, Ahold, Parmalat) has been followed by important financial market turmoil by the end of the decade. A common theme associated with these developments is the increased power of finance – especially shareholder value-oriented institutional investors — across advanced capitalist economies. Will the pressures of financial market globalization force companies to converge on a shareholder-based model of corporate governance? This book which highlights the importance of the institutional context in which companies are embedded, focuses on the divergence in the allocation of capital by shareholder value-oriented institutional investors in Europe's two largest nonliberal market economies: France and Germany. The major difference between these two economies is that France has proven to be twice as attractive to short-term, impatient shareholders with short-term horizon as compared to Germany — a disparity that disappears for investors with a longer term horizon. These empirical findings highlight the importance of providing a sophisticated differentiation between different categories of institutional investors in order to assess the impact associated with the greater prominence of finance. Goyer points to the importance of firm-level institutional arrangements in the process by which companies coordinate their activities as the key variable for understanding the investment allocation of impatient investors. The implication is that the governing of corporations is not about whether or not strategies of shareholder value are being adopted — but rather what types of strategies of shareholder value are being pursued.

This book explores current thinking on corporate governance by way of a detailed study of the governance practices of fourteen Japanese companies. The author of this book was granted extensive access to these Japanese companies, as well as to their partner companies, their shareholders, and their banks, and was therefore able to provide a detailed insight into the way that Japanese companies are actually governed on a day-to-day basis. The book suggests that current mainstream conceptualizations of corporate governance are inadequate, as they do not help to understand the way that these Japanese companies are directed and controlled in practice. In the majority of cases, governance operates through a system which draws on the reciprocal obligations, responsibilities, and trust generated in everyday interactions at the individual and organizational level. The conclusions of the research have important implications not only for our understanding of the Japanese system of corporate governance, but also for international corporate governance policy and research in general. In particular, the book commends greater recognition that alongside the currently dominant concern ‘controlling’ the behaviour of company managers, the governance of companies might equally be considered in terms of the responsibilities, reciprocal obligations, and trust inherent in everyday interactions.

Corporate governance has become a major issue in business over the last decade. The author of this book has played a central role in developing policies, good practice, and our understanding of the complex issues involved. In 1992 the author chaired the committee, sponsored by the Bank of England, whose Report on the Financial Aspects of Corporate Governance (commonly known as the ‘Cadbury Report’) put issues of corporate governance on the map. Ten years on, the author now reflects on issues of corporate governance and chairmanship drawing on his own business and policy-making experience. This book discusses and explains the central issues of corporate governance; provides practical advice to chairmen and directors on their roles and responsibilities; and surveys the major codes of practice that have been developed in the last decade. It also considers the implications of the current review of company law and speculates on the implications of electronic developments for shareholders' voice and voting, the extent of a company's social responsibility, and the changing relationship between boards, managers, and investors. This book is both an informed commentary and a practical guide.

The book provides a new approach to Corporate Governance (CG) between and beyond, on one side, the agency and property right theory views, criticized for being too narrow; and, on the other side, the stakeholder view, criticized for being overly descriptive and analytically unmanageable. Bringing together distinguished scholars from economics, organization theory, cognitive science, and economic sociology, the book addresses the agenda of developing a pluralistic yet precise and design oriented approach to CG. Core basic traits of the proposed approach, linking the various contributions together, include: a revision of some rather questionable assumptions (such as that ‘objective alignment’ is a good thing, that firms do not have a personality distinct from that of shareholders, and that agents are only moved by extrinsic motivation); a recommended exit from the shareholder/stakeholder and the convergence/divergence dilemmas — which stem from rather universalistic and ‘one-best-way’ views of CG on both sides; and the development of a contingency approach to the design of effective CG structures. The book provides for policy makers different indications of what ‘good practices’ of CG are, with respect to the dominant view, in at least two respects: the portfolio of such practices is extended beyond the conventional set of incentives and controls; and good governance configurations are made contingent to variables ranging from more proximate factors such as actors' preferences and task complexity, to less proximate factors such as the economic cycle, the relative scarcity of different types of capital, labour market structures, and industrial relations.

This book is about the relationship between corporate governance regimes and labour management. It examines how finance and governance influence employment relationships, work organization, and industrial relations by means of a comparative analysis of Anglo-American, European, and Japanese economies. The starting point is the distinction widely found in the corporate governance, business systems, and political economy literature between countries dominated by ‘shareholder value’ conceptions of corporate governance and those characterized by ‘stakeholder’ regimes. By drawing on a wide range of countries, the book is able to demonstrate the complexities of corporate governance arrangements and to present a more precise and nuanced exploration of the linkages between governance and labour management. Each country-based chapter provides an analysis of the evolution and key characteristics of corporate governance, and then links this to labour management institutions and practices. The book goes beyond the ‘complementarities’ between governance and labour management systems identified in recent literature, and attempts to identify causal relationships between the two. It shows how labour management institutions and practices may influence finance and corporate governance systems, as well as vice versa. The chapters in this book illuminate current debates about the determinants of corporate governance, the convergence of national ‘varieties of capitalism’, and the impact of corporate governance on managerial behaviour. The book highlights the complexities of corporate governance systems and refines the distinction between market/outsider and relational/insider systems.

The chapters in this book address the state of Japanese corporate governance and managerial practice at a critical moment. They are based on detailed and intensive fieldwork in large Japanese companies and interviews with investors, civil servants, and policy makers in the period following the adoption of significant corporate law reforms in the early 2000s up to the months just before the global financial crisis of 2008. At the start of the decade, the time seemed right for Japan to move to a shareholder value‐driven, “Anglo‐American” system of corporate governance. Instead, an adjustment and renewal of the postwar model of the large Japanese corporation has taken place. Japanese managers have adapted to and reshaped corporate governance norms, using them to reform internal decision‐making structures. The board's role is seen in terms of strategic planning rather than monitoring, and external directors are viewed as advisers, not as representatives of the shareholders. Companies have responded to the threat of hostile takeovers by putting poison pills in place and have rebuffed hedge fund activists' demands for higher dividends and share buybacks. Although shareholder influence is more extensive than it was, central aspects of the Japanese “community firm” ‐ in particular, managerial autonomy and a commitment to stable or “lifetime” employment for core of employees ‐ largely remain in place. The Japanese experience suggests that there are limits to the global convergence of company law systems, and that the widespread association of Anglo‐American practices with the “modernization” of corporate governance may have been misplaced.

This book addresses major modern controversies in corporate governance, clarifying the issues at stake and assessing the arguments for corporate reform. The main focus is on governance of the large organizations that employ the majority of workforces in developed economies and which account for most of the finance and refinance of the private sector. Shareholder value and shareholder primacy are now under increasing scrutiny having previously been positioned as natural precepts of governance. The book joins that debate with a critique and also with suggestions for company reform that allow for plurality within jurisdictions: the trust firm, industrial foundations, social enterprises, the ‘benefit corporation’, restricted voting rights, employee representation etc. The book addresses several sets of controversies in corporate governance. Part 1 places the corporate form within the context of legal constitution and governmental regulation. The second set of chapters considers corporate governance systems and their role in innovation and adaptation. The chapters in part 3 discuss labour relations and worker involvement in the governance of companies. Part 4 widens the focus to consider effects external to the firm—on consumer interests and the environment. What these issues point to is that the modern corporation is not only an economic institution but also a cultural and political one, reflecting the firm’s role in civil society The overall theme is that the corporate governance agenda has been on the wrong track and needs to be fundamentally reset.

The Companies Act 2013 (hereafter, the act) and the revised code of corporate governance issued by the Securities and Exchange Board of India (SEBI), incorporated in Clause 49 of the Equity Listing Agreement, have incorporated global best practices in corporate governance. The book provides an understanding of different facets of corporate governance to enable readers to appreciate the changes brought in by the act and Clause 49. This book will be of interest to those who will either implement the new law or will study the changes in corporate governance practices that will occur with the implementation of the new law. This book is not a collection of research papers. It primarily includes articles that critically examine important provisions of the Companies Act 2013 and revised clause 49 in the light of the insights available from the review of the available literature. The discussions in the book are primarily from the business management perspective. Eminent scholars working in the area of corporate governance have contributed articles for this volume. The volume covers the following issues: evolution of corporate governance, the ‘comply or explain’ approach, executive compensation, related-party transactions, gender diversity on Indian boards, ethical business, independent directors, audit, audit committee, corporate governance in state-owned enterprises, and corporate social responsibility. Thus, the volume covers a wide spectrum of issues related to corporate governance.

The corporate governance systems of continental Europe have traditionally been quite different to those of the liberal market economies (e.g., the United States and the United Kingdom). Company ownership has been dominated by incumbent blockholders, with a relatively minor role for minority shareholders and institutional investors. However, since the mid‐1990s, European corporations have adopted many of the characteristics of the Anglo‐American shareholder model. Furthermore, such an increased shareholder orientation has coincided with a significant role for the Left in European government. This presents a puzzle, as conventional wisdom does not conceive of the European Left as the natural ally of pro‐shareholder capitalism. This book provides an analysis of this paradox by arguing that the postwar support of the European Left for the prevailing blockholder‐dominated corporate system depended on the willingness of blockholders to share economic rents with employees, both through higher wages and greater employment stability. However, during the 1990s, product markets became more competitive in many European countries. The sharing of rents between social actors became increasingly difficult to sustain. In such an environment, the Left chose to relinquish its traditional social partnership with blockholders and embraced many aspects of the shareholder model. The hypothesis is initially explored through a panel data econometric analysis of fifteen non‐liberal market economies. Subsequent case study chapters examine the political economy of recent corporate governance change in Germany and Italy.

This book explores the dynamic relations between corporate governance, employee voice, and the organization of work in the automotive supply industry. From research in three countries—Germany, Sweden, and the United States—it explores and compares historical patterns in changing governance regimes, voice, and work at plant level. It also explores the prospects for high-road, sustainable jobs in the sector. Three detailed case histories from each of the countries contrast companies facing different levels of exposure to capital markets: companies relatively sheltered from stock markets, companies that are highly exposed to them, and companies backed by private equity firms. This design allows for analysis, not just across different national contexts or business systems, but also within them. The complexity of the firm trajectories indicates that the ‘varieties of capitalism’ approach for understanding differences has limited analytical purchase. The cases also show that governance compromises and employee voice matter in any comparative analysis and understanding of corporate governance. The book positions the analysis of the empirical material firmly in the context of contemporary debates on the financialization of Western capitalism and the rise of shareholder value as a dominant ideology. According to some authors, this has made high-road forms of work organization less viable. Whilst the book finds persuasive evidence of the impact of shareholder value across our cases, the direct links of this to developments in stock markets are less clear cut. Rather, practices that optimize shareholder value are more easily attributable to the actions of top management, notably through stock repurchases.

The 2008 financial crisis calls for a re-examination of the basic premise of the orthodox shareholder-oriented model of the corporate firm and its governance. This book tries to meet this challenge. It posits that the primary raison d'être of business corporations is the organization of associative cognitive and physical actions to create corporate values broader than shareholders' values. It identifies five generic modes of organizational architecture distinguished by discrete combinations of human cognitive assets among management and workers, as well as their relationships to use-control rights of physical assets that are provided by the investors. For each of those architectural modes, a particular governance structure is associated as an essentially self-enforcing agreement among the three types of asset-holders. The selection of a corporate form from the possible varieties is evolutionarily conditioned and institutionally linked to stable outcomes of social and political games in which corporations are embedded and play. The book looks at the nature of the evolving diversity of the global corporate landscape and the rising importance of CSR, which contribute to the accumulation of corporate social capital. This evolving state appears to require the redefinition of the role of financial markets as informational, and governance infrastructures that are complimentary to diverse corporate organizations, rather than as dominant principals of corporations.

Companies across all industries are engaging in digital transformation to harness the power of advanced information technologies. Building on interviews and diverse case studies, this book describes how data and algorithms are reshaping management practices, organizational structures, corporate culture, and work roles. The book develops a broad framework for understanding digitalization not as a technological change, but as a new normative mindset, ‘the data imperative’. New managerial ideals compel companies to pursue digital omniscience and omnipotence—the abilities to represent and understand the world through real-time data flows and to control customer experiences, physical equipment, and workers with software. The efforts to complement and replace human expertise with data and smart algorithms are associated with shifts in strategic priorities, adoption of powerful modular architectures, new organizational structures, and introduction of artificial intelligence into diverse work roles. Surveying the changes in management and the workplace, this book offers an integrative and balanced account of the ongoing changes. It elaborates how artificial intelligence is changing work at all levels of the hierarchy and envisions how the emerging artificially intelligent organization will change how professionals work. The frameworks and ideas espoused in this book will help the reader understand the ongoing changes in the workplace that affect everyone from executives and professionals to frontline workers.