Historical emergence of Corporate Governance

Abstract

In the last decades, we have witnessed several financial scandals in the four corners of the world (Enron, Worldcom, Parmalat, UBS, Batam...) and which have in common the failure of the governance system. This concept only came into vogue in the 1970s in the United States, and in the space of twenty-five years has become the subject of debate among academics, regulators, managers and investors worldwide. In this sense, several researchers emphasize the importance of good governance as one of the fundamental elements of the sustainability of companies through the detection of various flaws and managerial deviations and their timely correction.

In this narrative, we will first trace the history of events related to the emergence of corporate governance in the United States between the mid-1970s and the late 1980s, a period during which corporate governance underwent several reforms. Second, we will describe how corporate governance has spread around the world since the 1990s. Otherwise, we will relate the facts that marked the spread of the concept of corporate governance in other countries of the world, where it experienced an unprecedented academic and regulatory development. Finally, we will conclude with a look at the different theoretical foundations related to corporate governance, notably agency theory and stakeholder theory, and the contribution of each to corporate governance.

Keywords: Corporate governance, shareholders, managers, agency theory, stakeholders

JEL Classification: G30, K22, M00

Type of paper: Theoretical article