A Comparative Theory of Corporate Governance

Abstract

The term corporate governance is used in two distinct ways. In Anglo-Saxon countries like the US and UK good corporate governance involves Þrms pursuing the interests of shareholders. In other countries like Japan, Germany and France it involves pursuing the interests of all stakeholders including employees and customers as well as shareholders. Anglo-Saxon capitalism has been widely analyzed but stakeholder capitalism has not. This paper argues that stakeholder capitalism can often be superior when markets are Corporate governance has been a topic whose importance has been growing, particularly recently. But what exactly is corporate governance? The term is used in a variety of ways. In different countries, in particular, the term has different meanings.