Journal of Accounting and Management Information Systems (JAMIS)

Corporate governance: a link between gaining investors’ trust and guarding stakeholders’ long-term interests

18/2006 ,   p60..77

Cristina VASILE

Keywords:   frameworks and mechanisms of corporate governance; corporate ownership structure; the principals and the agents in the agency theory; stakeholder theory


In cases when the manager of a company is also its founder, and therefore its sole or main shareholder, it is likely that company governance issues never arose, or if they did, they were treated as marginal matters. At the XXth and XXIst centuries’ frontier, a series of financial disasters occurred, translated as real states of economic crisis, including many corporate bankruptcies located on both sides of the Atlantic Ocean. All this has lead to a higher-than-ever emphasis on conceptual aspects and practical issues of corporate governance. However complex and sophisticated the corporate governance concept may seem, the fact is that it confronts the contemporary capitalist system (especially the big and listed companies), with the answer to a single, but fundamental question: “which is the path to follow for a company, evolving within a certain economic environment, such as to reach its main mission – the creation and distribution of wealth?”. In other words, corporate governance represents the institutional and relational ‘device’, analyzed with all its complex structures, in a more or less explicit manner, guiding the corporate start-up, functioning and regulatory issues. Such a “device” is provided with a strong conceptual basis inspired from public authorities’ rules and principles, and by a country’s professional environment, as a way to build (and sometimes reestablish) investors’ trust and business transparency, all by taking care of the certification obligations, administrators’ independence, shareholders’ rights (especially for the minority shareholders).
In this summary it may be seen that corporate governance has both a social and political nature, and is actually interpreted through good knowledge regarding: company rights, organizational social issues, economic background, financial markets’ practices, and overall regarding concepts generated by the business administration sciences. Even though the most common image is the one of opposite dominant governance models, originated in two different geopolitical areas: American and German-Japanese, it may be stated that within the European Commission it has been recently launched an overall study regarding the corporate governance issue, an analysis which includes all essential elements and limits of the systems under study. Taking into consideration all the mentioned statements, our communication is meant to analyze and disclose conclusions regarding the relationship between a company’s efforts for gaining investors’ trust and optimizing the long-term stakeholders’ interests, involved in the corporate governance mechanism.