Corporate Governance, The Problems with NEDs (Criticisms by Sarah Kiarie)…
Corporate Governance Theories
Concession and Fiction Theory
Companies have a separate existence from its shareholders and although its members change, its collective interests and objectives do not.
The debate between Adolf Berle & Merrick Dodd
(in the 30s in the Harvard Law Review)
advocates a pluralist formulation that the company is a real person, and not merely an aggregate of its members.
Like any real person, a company has responsibilities that may sometimes be against its corporate adjectives -- This provides a clear basis for separation between ownership and control.
believed Dodd's theory was too vague and that the company should only be accountable to the shareholders and that the managers were trustees for shareholders and shareholder wealth maximisation was the corporation's sole interest.
Concern with efficiency.
This theory has many subsets.
Neo-Classical Economic Theory
Theory of the Firm
The Nexus of Contract Theory
Firms are a nexus of contracts that ensures efficiency through a presumption that shareholders maximise their own self-interest.
The state merely functions to facilitate these private arrangements, it cannot intervene.
The Cadbury Committee
The Greenbury Committee
The Hampel Committee
The Higgs Review
A review of the effectiveness of NEDs
The Combined Code (2003)
UK Corporate Governance Code (2010)
Replaced the Combined Code. Content is still very largely based on the previous Revised Combined Code with may similar or same provisions.
Six Main Changes to the Code
The Problems with NEDs
(Criticisms by Sarah Kiarie)