The UK and USA Corporate Governance - Research Paper Example

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The paper “UK and USA Corporate Governance” shall discuss the thesis that the UK and USA Corporate Governance frameworks are predicated on fundamentally different approaches to principal/stakeholder protection, one being rules-based, the other principles-based…
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The UK and USA Corporate Governance
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Download file to see previous pages The present research has identified that Enron debacle, WorldCom collapse, and certain other giant companies did not only sink their boats but many related stakeholders did lose their considerable amount of investment within a period of a few days. But, the corporate scenario before these financial debacles was same in the United Kingdom in the early 1990s when the Bank of Credit and Commerce International (BCCI) shocked the financial world with its financial losses. Given to the severity of the BCCI, Bank of England intervened to financially support the BCCI. On 5th July 1991, BoE closed down the UK branches of the BCCI and dismissed the staff. On the same day, the regulators in the United States of America, France, Switzerland, and certain other countries acted in the same way. When asked to the BoE to clarify its actions over the issue of BCCI, the BoE responded that instead of creating a panic in the financial world, BoE considered it better to slowly and gradually shut down the branches of the BCCI without experiencing further financial problems over BCCI. These two events raised many serious questions over the governance and management of the companies. The investor community and other stakeholders did not much rely on the companies and on their Boards. The investors had lost their trust over the entire corporate structure since the debacles occurred in the mega-companies in the corporate world. These financial debacles separately impacted in the US and in the UK; and as a result, the respective regulatory authorities faced different financial situations which caused them to revise their financial and regulatory policies in response to the financial debacles respectively faced by them. Corporate governance has become a part of the corporate world. The importance of corporate governance is that it deals with the conflicts of interests occurring between or among different stakeholders. In today’s corporate world, there would be many occasions where the events of conflicts of interest to occur. Every stakeholder tries to serve his or her interests; sometimes attaining these interests require compromises on the other’s stakes. In order to reduce the chances of conflicts of interest among different stakeholders, the theory of corporate governance has been put in place. ...Download file to see next pagesRead More
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