Corporate Governance Under Globalization in the U.S Research Proposal

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Corporate Governance Under Globalization in the U.S. And the U.K.

The failure of governments both domestic and international to provide effective oversight of corporate activities over a period of significant economic growth would precipitate a pattern of misappropriation, corruption and willful mismanagement. This would help to produce our current fiscal crisis as a global community and within powerful economies such as the U.S. And the U.K., with a clear need for stronger and more carefully conceived Corporate Governance emerging from the dust of countless corporate collapses. And though both the United States and the United Kingdom have responded by adopting stricter controls, the distinction in their respective approaches to addressing issues of corruption may well be in their differing definitions of corporate governance. The research hereafter will therefore compare actions taken practically and legislatively in the U.K. To stem the tide of corruption as these compare to actions taken in the United States. The comparison should lead to a common ground on a generic definition for corporate governance.

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Thus, the primary research question at hand here will be to ask what factors have defined and shaped the current thrust toward a more strict and engaged policy approach for the United Kingdom as well as to evaluate the effectiveness of this policy approach. Additional research questions which the research will investigate will concern the nature of policy legislation as it compares to that in the United States, using the comparison as a template for understanding the global concerns which have played heavily into a problematic pattern of corporate deregulation. As a foundational research question, the discussion will query as to the basic and practical definitions for corporate governance, particularly as applies to the U.K. And the United States.

Research Proposal on Corporate Governance Under Globalization in the U.S. Assignment

This choice of comparison is inclined by the belief that United States and the United Kingdom share the common interests of furthering the aims of capitalist development, free market enterprising and global free trade. Both nations are extensively backed by historic traditions of corporate development and monopolistic growth and today, both nations have endured no small degree of scandal, corruption or incompetence at the highest ranks of corporate leadership. Two decades of heightened global corporate deregulation served to produce an era of corporate collapse, when revelations of ethical and legal abuses rained down upon the private sectors of the economic world. In response, a discourse and legislative thrust have emerged based on the premise that the period of deregulation is now over and more concerted corporate governance is necessary. Legal considerations concerning both the United States and the United Kingdom serve to demonstrate that in such areas as corporate accounting and trading, the prevailing logic is increasingly that there is a need for stronger oversight on the part of governments with respect to the practices of their corporations. And yet, core distinctions between them exist which inform this discussions formation of a definition for corporate governance.

This logic drives the methodological approach of this discussion, which is primarily inclined by the need to establish a clearer understanding of current legal parameters, philosophical thrusts and critical examination on the subject of corporate governance. Therefore, the methodology will be a literature review, with a comparative analysis driving the presentation of literature sources concerning corporate governance in the U.K. And the U.S. The literature has been selected from a wide array of print and online sources with a direct focus on sources drawn from business ethics, law and corporate management journal articles as well as from the text of key laws such as the Turnbull Report in the U.K. and, as a counterpart for examination, the Sarbanes-Oxley Act in the U.S. The information will, therefore, come from sources in both the U.K. And U.S. which are given credibility by specialization in the fields of corporate governance, globalization or the legal assessment of regulations in the areas of accounting and financial transaction transparency. These are subjects which will emerge as bearing critical importance in the literature review.

Subsequent to a section where we will establish a generic definition for corporate governance and will draw the theoretical support for a need to improve and refine corporate governance, the research will position itself to discussion on the practical realities of corporate governance as an evolving effort in both the U.K. And the U.S., driven by global and domestic patterns which have problematically de-escalated the emphasis on corporate governance. This part of the discussion will also feature an evaluation of the effectiveness of U.K. corporate governance today. The final phase of this discussion will channel these findings into a set of recommendations for the improvement of corporate governance.

Chapter 2-Theory:

Most of the literature evaluated for the purposes of this research was examined under the theoretical auspices that there is a need for stronger corporate governance due both to evidence of the failures inherent to overly-aggressive deregulation and to evidence that the free-trade implications of globalization have encouraged this path to a fault. Thus, the theoretical construction of this argument is postured with an intent to yield suitable recommendations for an organization already involved in the increasingly multinational atmosphere of corporate enterprising. Namely, the bulk of the literature evaluated suggested that there is an inherent flaw in our current approach to globalization which defies the logical demand for sounder corporate governance. This flaw is found in the vacuum between the decline of governmental regulation in parallel to the rise of globalization and the current reluctance of private sector leaders to adopt internal governance strategies to help restrain the process of globalization.

It is here that we consider the necessity for a generic definition of corporate governance that might suit the needs of the diversity of nations invested in globalization. As distinctions arise in our understanding of the U.S. And U.K. In terms of an approach to corporate governance, it becomes important to denote those areas of commonality upon which such a definition can be sought. In achieving such a definition, we find that "classically, corporate governance is divided into four main pillars: Board independence, shareholder treatment, information disclosure and executive remuneration. Constant themes are the protection of shareholder rights (including the equitable treatment of all shareholders), timely and accurate disclosure of information (to analysts and investors), strategy and monitoring of the Board and the supervisory involvement of non-executive directors." (Jackson & Williams, 1) These conditions are useful in finding a generic definition of corporate governance in that they provide a basis for controlling those aspects which relate propriety and operational effectiveness but which do not pigeonhole governance into a set mold of solutions. Given the difference in the severity of its conditions, the set of corporate governance parameters invoked in recent years between the U.S. And the U.K. is best identified according to purpose rather than practice and procedure.

The purposes of honoring stakeholder interests and of ensuring balance between executive compensation and the provision of public information serves well to suggest a generic definition for corporate governance which distinguishes it as a controlling force ensuring an organization is lead properly, with decision-making and regular operational proceduralism reflecting the desire toward long-term survival, success and security. This definition is underscored by the understanding also discussed throughout this account that corporate governance is a necessary aspect of business orientation that will have a substantial impact on the practical viability of an organization. Accordingly, "the assessment of corporate governance standards is a valid measure of equity risk. There is a clear link between corporate governance assessment and share price volatility, corporate profitability and share price performance." (Jackson & Williams, 1) Thus, another aspect of the generic definition would be the conception that corporate governance inherently reduces elements of risk and other economic setback.

Therefore, a final definition which is used in application throughout the remainder of this discussion, corporate governance is the process of ensuring company stability and viability through the identification of standard operating procedures and administrative goals that are informed practically, strategically and ethically; as well as through the assurance that stakeholders at every level are considered and honored in such procedures and goals.

Miles Kahler and David a. Lake's 2001 article, "Globalization and Governance," would provide a useful basis for an understanding of the patterns of deregulation which have been part and parcel to globalization and which have demanded improved oversight. The understanding which is provided here proceeds from a core theoretical construct which has guided U.K. policy legislation over the course of a decade. Here, the definition of corporate governance proceeds as a process of internal, mandatory and conscientious internal control and review, with the ultimate intent being ethically and legal compliance as well as a guarantee of accountability with respect to corporate leadership. As stated by the 2003 draft of the Internal Control Requirements of the Combined Code, "the guidance is based on the adoption by a company's board of a risk- based approach to establishing a sound system of internal control and reviewing its effectiveness. This should be incorporated by the company within its normal management… [END OF PREVIEW] . . . READ MORE

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