Models of Corporate Governance: Who’s the Fairest of them all? Harvard Case Solution & Analysis

Models of Corporate Governance: Who's the Fairest of them all? Case Study Solution


The year 2007 marks the uprising of major issues related to corporate governancethroughout the world. Topics related to corporate fraud, scandals for accounting, extra compensations, bankruptcy, etc. mainly related to the CEOs of the business firms were the trending topics covered by the newspapers. The mainreasonbehind all these issues wasto target the central government which is responsible to monitor these scenarios. The bad governance system was behind this drawback and thus is the one to blame for the shortcomings. The standards of good governance are not well established and uniform throughout the world. The main reason behind this phenomenon is the vast cultural and traditional differences occurring in different parts of the world. The corporate governance system in US and Britain is the shareholder –the centric model also known as the Anglo-Saxon model in which shareholder values are preferred the most. While the Europeans and Germans adopted a Stakeholder centric model of governance which emphasizes the importance of stakeholders like a labor union. There is a need for agood governance system to overcome the disparity between the owners and the management systems. These problems are referred to as Agency problems by economists. Thus to reduce the cost, some sort of monitoring system is heavily required by the organization. Further, the main management system being followed by these firms are the centralized system which has always proved a hallmark. Even though the system changes to decentralized, it would not benefit the firm well as the corporation factor will still be missing. (Tayan, 2008)

Problem Statement

The newspapers covered a detailed analysis of the fraud going on in the business world.Corporate fraud, scandals of accounting, excessiveness of compensation, and other business-oriented scandals were covered. The main source of these accusations was found to be the governance systems that are unworthy of fulfilling basic responsibilities. The governance systems of the US and European countries vary greatly and thus the best system needs to be identified to overcome the corporate governance system.(Tayan, 2008)

Current Situation

The current scenario in many companies defines the problems related to the CEOs who are the main source of corruption. They are seen enjoying the position of being destined and spending millions on luxuries. This leads to corrupt corporate structure, corporate frauds, scandals of accounting, etc. which back pulls the company and its employees. Despite these, the main source of the problem is identified to be the bad governance system that is prevailing. This leads to a negative check and balance system which then entails fraudin a firm. Moreover, the lack of transparency is observed in these firms, which dictates the decreased transparency in job opportunities, employment, hiring, etc. due to the lack of necessities.The firms were also found to be centralized which is a major halt in the way of progress and many successful firms are seen to be incorporating the decentralized system of governance.Although observations declare that even if the system is decentralized, the problem would remain unsolved due to a lack of corporate strategies.

Problem Analysis

The primary problem in this case refers to bad corporate governance which is misleading and affects the entire organization. The maintenance and control system needs to be updated to take a deep check and balance on the firm’s corporate culture and the working environment and thus reduce the level of corruption in corporate systems. The secondary problems linked to these lie with the corrupt CEOs and the fraud occurring in the firm’s corporate culture. The lack of transparency is another major issue that leads to corrupt job hiring and seeking issues, pending tax payments, low transparency in the revenue basis, etc. are linked to the main issue.

The vast media coverage is major evidence of the existence of these problems and the deep analysis depicts the presence of bad governance as no other issue is linked to corruption lead problems. Bad governance is the only reason behind the corruption being dictated.The year 2007 marks the vast media coverage defining corporate fraud, scandals of accounting, excessiveness of compensation, and other business-oriented scandals. The problems are interlinked as the bad governance is deeply linked to the corrupt practices being carried out as no check and balance system is ruling the firm and so things are getting out of order.

Ramifications in short-run

The major consequences of bad governance in the short run are related to the corruption-linked practices being held out inthe firm. Uneven business practices, decrease in revenue generation, halt in the financial systems, hiring of the corrupt workforce, etc.

Ramifications in long-run

The consequences in long run are severe and lead to the deterioration of the firm as there is no check and balance. Lack of accountability leads to serious results and thus halts the entire economic and financial system of the firm.(Gholipour, 2019)

Corporate Retains a National Identity and National Influence

National identity is broadly uncertain and it is effect by globalization it relates that globalization put national identity in depression and eventually increases cosmopolitanism. This idea refers that every human being are a member of a single community but unfortunately the majority argues that it works in the opposite direction and reinforces national feelings in the form of criticism, which ultimately affects various segments of society. Globalization under national identity creates conflicts theoretical perspective and variations of the observed results are predictable. Using different methods for inquiry employ assorted operationalization for the dimension of national identity that ultimately uses deviating sources of data, which leads to conflicting assumption. (Ergashev, 2019)....................

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