The History of Regulations on Corporate Governance: Comparison between UK and USA - Dissertation Example

Corporate governance relates to the distribution of rights and obligations among stakeholders in an organization. The different practices around the world, however, have made it virtually impossible to provide a universal definition of corporate governance. The current global financial crisis is perceived to be a result of “a crisis in corporate governance”. The global penetration of Anglo-American institutions of governance and markets have given rise to a number of doubts about the effectiveness of the Anglo-American corporate governance model.

As a result, there is considerable debate over whether world economies will gravitate toward adopting a common Anglo-American corporate governance structure or will retain diverse corporate governance institutions.Essentially there are two corporate governance models in practice. The first is the Anglo-American model which is market-based and emphasizes shareholder priorities. The second model is “relationship-based” with an emphasis on stakeholders in a broad sense.6 Since the US and the UK are among the world’s more economically advanced countries with corporate holdings all over the world, the Anglo-American model draws considerable attention and debate.

Ultimately, a number of governance systems globally reflect the governance models of the US and the UK. What has developed is a convergence of US and UK corporate governance models globally in the guise of the Anglo-American model.Despite the historical significance of the Anglo-American corporate governance model, the relationship-based corporate governance model has been gaining currency. For example, the OECD describes corporate governance as focused on a variety of relationships “between a company’s management” and its wider stakeholders.

8 The rise of the relationship-based corporate governance model may be a response to the perceived shortcomings of Anglo-American corporate governance.