The Economics of Corporate Governance and Mergers
Show Less

The Economics of Corporate Governance and Mergers

Edited by Klaus Gugler and B. Burcin Yurtoglu

This book provides an insightful view of major issues in the economics of corporate governance (CG) and mergers. It presents a systematic update on the developments in the two fields during the last decade, as well as highlighting the neglected topics in CG research, such as the role of boards, CG and public interest and the relation of CG to mergers. Two important conclusions can be drawn from this book: the first is that corporate governance systems that better align shareholders’ and managers’ interests lead to better corporate performance; second, there is an important relationship between CG structures and the quality of firm decision-making, one of the most important being the decision to merge or take over another firm.
Buy Book in Print
Show Summary Details
You do not have access to this content

Chapter 3: Corporate Governance and the Public Interest: The Way Forward

J. Robert Branston, Keith Cowling and Roger Sugden


* J. Robert Branston, Keith Cowling and Roger Sugden INTRODUCTION The idea of good governance refers to a wide range of so-called public and private activities, and accordingly to governments, public agencies, corporations and other organizations. Our particular focus is the economics of the modern corporation and the chapter is consequently a contribution to the long-running debate initiated by Berle and Means (1932). Seventy-five years have not dimmed the controversy and topicality of this subject for economies throughout the world.1 Indeed, the debate on governance was given fresh impetus by the collapse of the US energy corporation Enron in 20012 (see for example the reflections of Galbraith (2004, p. 49) on ‘the end to corporate innocence’). Questions were asked about shareholders’ inability to prevent managers in ‘their’ corporation from pursuing dubious and illegal strategies. These experiences led to policy queries in other countries, not least in the UK, where further questions were more recently asked of the Royal Dutch Shell Group concerning the role of directors in the overinflation of oil reserves.3 The response to these scandals focused on shareholders being wronged by the criminal or otherwise undesirable activities of the managers/directors of the various companies, and thus on what might be done to prevent such actions in the future. The implication is that corporate governance is primarily concerned with the relationship between shareholders and managers/directors. We would take issue with this response and, in contrast, argue in this chapter that there is a need for accountability to...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information

or login to access all content.