Influence of Public Policy on Governance: Is there a Role for Shareholders as Stakeholders?

Nadeem, Mohammed
March 2008
Journal of Global Business Issues;Spring2008 Conference Edition, Vol. 2, p35
Academic Journal
This study examines whether corporations should operate solely to maximize shareholder value or to serve a more broadly defined, diverse set of social interests. This paper reviews how American public policy toward corporations has rested upon different answers to this question, from colonial times to the twenty-first century. It does so in order to provide a historical context in which to view the social and ethical issues that underlie recent corporate scandals. In the last several years, powerful Chief Executive Officers (CEO's) have been forced out by the board members, employees, shareholders, and the government for poor performance or ethical improprieties. Boardroom scandals and corruption of companies during periods of crisis (Murray, 2007) have created a sense of paranoia and a zero-tolerance atmosphere. As Public corporations are in the midst of radical change due to governmental oversight and the role of the CEO may be greatly diminished as a result. American corporate finance and law has been shaped by the failures of bold, visionary speculators whose reckless gambles invariably attempted a bridge too far and inflicted great damage on others when they collapsed. In turn, their debacles spurred the reforms of the New Deal and the Sarbanes-Oxley Act. Compounding the scandals is an ongoing catand-mouse game between regulators efforts to police the factors that lead to failures and efforts by corporate America (Skeel, 2005) to evade the current regulation in the name of efficiency and flexibility. But there is also a silver lining to the stunning failures: the outrage they provoke galvanizes public opinion in favor of corporate reform. This study offers a strikingly new diagnosis of the corporate governance in the context of recent corporate scandals that raise ethical questions related to the duties and obligations of corporate directors and officers, and lessons to be learned for global corporations.


Related Articles


    The article sets out to show that by adopting the Sarbanes-Oxley Act of 2002 together with other rules of the United States corporate governance regime, Canadian securities regulators moved away from a Canadian, principles-based approach, and not necessarily for the better. It does so by first...

  • CRITICIZING THE CRITICS: SARBANES-OXLEY AND QUACK CORPORATE GOVERNANCE. Robert Brown, Jr., J. // Marquette Law Review;Winter2006, Vol. 90 Issue 2, p309 

    The article provides information on the Sarbanes-Oxley Act (SOX) in the U.S. The Act aims to improve corporate disclosure by increasing the gatekeeper function of accounting firms as well as to intensify top officials and board directors' supervisory role. According to the author, SOX was...

  • A comparison of the Viable System Model and Seven Models of Risk with the effects of the Sarbanes-Oxley legislation. Leonard, Allenna // Journal of Organisational Transformation & Social Change;2006, Vol. 3 Issue 1, p85 

    A strong need to respond to threats to the credibility of large corporations and their auditors in the wake of scandal led to the passage of legislation focused on controls rather than control. The limitations of this approach are discussed and compared with the more comprehensive perspective of...

  • Domestic and International Influences on Firm-Level Governance: Evidence from Canada. Anand, Anita I.; Milne, Frank; Purda, Lynnette D. // American Law & Economics Review;Spring2012, Vol. 14 Issue 1, p68 

    We examine the extent to which Canadian firms complied with domestic corporate governance best practice guidelines and U.S. corporate governance law including the Sarbanes-Oxley Act. We ask whether voluntary compliance under both regimes occurred and whether cross-listing status and ownership...

  • Unleashing the Potential of Internal Audit. Rittenberg, Larry; Anderson, Dick // Financial Executive;Oct2002, Vol. 18 Issue 7, p48 

    This article focuses on how organizations can better manage their governance, compliance and audit practices. Several large accounting scandals provoked increased governmental and shareholder scrutiny of corporate accounting. In particular, the Sarbanes-Oxley Act of Congress forced audit...

  • Compliance -- a blessing in disguise! LAMDAN, RONEN // SDA Asia Magazine;2008, Vol. 22/23, p14 

    The article looks at the benefits of compliance regulations to companies. Compliance increases investor confidence, which is evident in the improvement of the Dow Jones after the Sarbanes Oxley Act (SOX) was passed in the U.S. Compliance also improves corporate governance in areas of risk...

  • Power to Investors. Field, Anne // Treasury & Risk;Nov2007, p19 

    The article focuses on the shareholder activities and expectations for 2008. With the focus of the Sarbanes-Oxley on the empowerment of the board, governance experts believe that shareholders will be at an advantage in 2008. Companies have employed the majority rule in relation to election of a...

  • SOX May Temper Call for New Legislation. Duca, Christopher // NACD Directorship;Dec2008/Jan2009, Vol. 34 Issue 6, p74 

    The author comments on issues related to the Sarbanes-Oxley Act (SOX) in the U.S. According to the author, a call for new legislation mandating increased transparency and expanding the rights of investors may be tempered by the sweeping corporate governance measures of the SOX. The author states...

  • Key Issues for Directors. Lipton, Martin // Venulex Legal Summaries;2005 Q4, p1 

    The article offers information on key issues that directors of corporations should be aware of. Directors should be able to develop executive compensation programs to avoid public criticisms. They should understand the reforms after the Enron case and the Sarbanes-Oxley act. Directors need to be...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics