Theoretical and Applied Economics (Aug 2006)
Corporate Governance, Essential Lever of the Policy for Stockholders Wealth Maximization and its Contemporary Complements
Abstract
After the Second World War, in USA and in the capitalist Europe, a new economic growth regime emerges, known under the name of: the “ford regime”. This regime is based on four main institutional issues: the “ford” wage proportion – which organises the sharing of productivity gains; the active economic policies – budget and monetary ones; the “providence” status – given by a social security system based on social classes and generations’ solidarity; financial systems – meant to ensure the financing of the productive capital accumulation through bank credits. Beginning with the 70’s, the international finances raised their powers within a globalization context. The financial globalization is a process of capital markets’ interaction both at a national and international level – a fact that leads to a world unified cash flow market. Corporate governance is often presented as one of the key institutions of the new capitalism. The theoretical and classical hypothesis, which lies at the base of the Anglo-Saxon governance model, is the one saying that a company’s managers and shareholders have opposite interests. The managers are seeking to take advantage of their status and financial powers because of the inside-business information they hold, all by damaging the shareholders. The “agency theory” is meant either to explain and detail the organisational models as ways to solve conflicts or reduce involved costs (all leading to a “positive agency theory” -PAT), or to allow the reduction of these conflicts’ costs (leading to a “normative/prescriptive agency theory”). The new corporate governance models have as objective the reduction of the informational asymmetry, and of guiding the business leaders towards managing the company in the interests of the shareholders by placing all operations in the area of maximising the value per share. Beyond this approach, many countries adopt a governance model where the company is seen as a social construction, resulting from the interaction of all participating parties. In this case, the main idea is that if on short-term, the company doesn’t focus on maximising exclusively the shareholders’ interests, the economic entity will not be able to actually develop, and on long-term this would have a negative impact on the shareholders.
