A CONCEPTUAL ANALYSIS OF CORPORATE GOVERNANCE AND ITS ENFORCEMENT

Year 2019, , 41 - 50, 28.02.2019

Hatice Kübra Kandemir

https://doi.org/10.29064/ijma.514041

Cited By: 1

Abstract

Reducing agency costs is the principal problem of corporate governance. Although the scope and stringency of the laws and rules on eliminating agency costs are expanding, there is still need for the understanding of the supervision and enforcement of these rules. Enforcement can take the forms of public and/or private. With dispersed and concentrated ownership patterns, the relevance of public and private enforcement mechanism may differ; due to the appearance of agency problems unlikely.The purpose of this paper is to provide a conceptual analysis on corporate governance strategies involving the exercise of control rights, the appointment of independent directors, auditing, and disclosure. This paper will also include a guideline on the enforcement mechanism in Turkey and the ways in which they are used to control the agency problems; between owners and managers, controlling shareholders and non-controlling shareholders or creditors.

Keywords

Agency Problems, Control Rights, Independent Directors, Auditing, Disclosure, Regulation, Corporate Governance, Public Enforcement, Private Enforcement

A CONCEPTUAL ANALYSIS OF CORPORATE GOVERNANCE AND ITS ENFORCEMENT

Abstract

Reducing agency costs is the principal problem of corporate governance. Although the scope and stringency of the laws and rules on eliminating agency costs are expanding, there is still
need for the understanding of the supervision and enforcement of these rules. Enforcement can take the forms of public and/or private. With dispersed and concentrated ownership patterns, the relevance of public and private enforcement mechanism may differ; due to the appearance of agency problems unlikely. The purpose of this paper is to provide a conceptual analysis on corporate governance strategies involving the exercise of control rights, the appointment of independent directors, auditing, and disclosure. This paper will also include a guideline on the enforcement mechanism in Turkey and the ways in which they are used to control the agency problems; between owners and managers, controlling shareholders and non-controlling shareholders or creditors.

Keywords

Agency Problems, Control Rights, Independent Directors, Auditing, Disclosure, Regulation, Corporate Governance, Public Enforcement, Private Enforcement

References

• Aktan, B., Masood, O., and Yilmaz, S. (2009). Financial shenanigans and the failure of ethics in banking: a review and synthesis of an unprecedented fraud. Banks and Banks Systems, 4(1), 30-36.
• Baldwin R. and Cave, M. (2012). Understanding Regulation Theory, Strategy, and Practice. 2nd edn, Oxford University Press.
• Baron, D. P. and Besanko, D. (1984). Regulation, Asymmetric Information, and Auditing. Rand Journal of Economics, 15(4), 447-470.
• Berglöf, E. and Claessens, S. (2006). Enforcement and Good Corporate Governance in Developing Countries and Transition Economies. The World Bank Research Observer, 21(1), 123-150.
• Berle, A. A. Jr. and Means, G. C. (1932). The Modern Corporation and Private Property. New York, MacMillan.
• Coffee, J. C. Jr., (2002). Understanding Enron: “It’s About the Gatekeepers, Stupid”. The Business Lawyer, 57, 1403-1420.
• Coffee, J. C. Jr., (2006). Gatekeepers: The Professions and Corporate Governance. Oxford University Press.
• Easterbrook, F. H. and Fischel, D. R. (1984). Mandatory Disclosure and the Protection of Investors. Virginia Law Review, 70(4), 669-715.
• Eminoğlu, C. (2014). Türk Ticaret Kanunu’nda Kurumsal Yönetim (Corporate Governance). 12 Levha.
• Gerner-Beuerle, C. (2009). The Market for Securities and Its Regulation through Gatekeepers. Temple International and Comparative Law Journal, 23, 317-377.
• Hart, O. (1995). Corporate Governance: Some Theory and Implications. The Economic Journal, 105(430), 678-689.
• Jackman, D. (2004). Does Regulation Make It Worse?. Journal of Financial Regulation and Compliance, 12(2), 106-110.
• Jackson, H. E. and Roe, M. J. (2009). Public and Private Enforcement of Securities Laws: Resource-Based Evidence. Journal of Financial Economics, 93, 207-238.
• Jensen, M. C. and Meckling, W. H. (1976). Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, 3(4), 305-360.
• Kandemir, H. K. (2015). External Auditing in Turkey: A Critical and Comparative Analysis of the New Law. European Business Organization Law Review, 16, 711-734.
• Kraakman, R., Armour, J., Davies, P., Enriques, L., Hansmann, H. B., Hertig, G., Hopt, K. J., Kanda, H., and Rock, E. B. (2009). The Anatomy of Corporate Law. 2nd edn, Oxford University Press.
• OECD (2015), G20/OECD Principles of Corporate Governance, September 2015.
• OECD (2017), OECD Corporate Governance Factbook 2017.
• Schouten, M. C. (2009). The Case for Mandatory Ownership Disclosure. MPRA Paper No. 14880. Available online at http://mpra.ub.uni-muenchen.de/14880/.
• Shleifer, A. and Vishny, R. W. (1997). A Survey of Corporate Governance. The Journal of Finance, 52(2), 737-783.
• Solomon, J. (2004). Corporate Governance and Accountability, 3rd edn, John Wiley & Sons.
• SPK (2014). Communiqué on Corporate Governance Principles II-17.1, Official Gazette No: 3/1/2014.
• Turkish Capital Markets Law, No. 6362, Official Gazette No: 30/12/2012.
• Turkish Commercial Code (TCC), No. 6102, Official Gazette No: 14/2/2011.
• Watts, R. L. and Zimmerman, J. L. (1983). Agency Problems, Auditing, and the Theory of the Firm: Some Evidence. The Journal of Law and Economics, 26(3), 613-633.
• Yurtoglu, B. B. (2000). Ownership, Control and Performance of Turkish Listed Firms. Empirica, 27, 193-222.