Challenges of corporate governance: Twenty years after Cadbury, ten years after Sarbanes-Oxley

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Abstract

This paper sets the background to the Special Issue of the Journal of Empirical Finance on Challenges of Corporate Governance. It identifies the alternative approaches that can be taken to solve agency problems stemming from asymmetries of information: (i) ex-post monitoring through audit and information provision, (ii) ex-ante monitoring through boards, and (iii) incentivisation through the alignment of managerial incentives with shareholders. It discusses how the UK and the US have responded to corporate failures and relates the development of regulation in these countries to the three alternative approaches. It concludes with a discussion of three groups of challenges: (i) understanding alternative regulatory approaches, (ii) determining the importance of geo-diversity of business culture, and (iii) overcoming the problems of the political economy of corporate governance.
LanguageEnglish
Pages1-9
Number of pages9
JournalJournal of Empirical Finance
Volume27
Early online date22 Dec 2013
DOIs
StatusPublished - 1 Jun 2014

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Sarbanes-Oxley
Corporate governance
Monitoring
Shareholders
Alignment
Audit
Finance
Information provision
Corporate failure
Business culture
Managerial incentives
Agency problems
Asymmetry of information
Political economy

Cite this

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