Unsuccessful Application: Example Three

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  • The research question was not answered.
  • The essay has no evidence of criticism.
  • The work relies on very old references (e.g.1882 and 1932).
  • With such a small word limit, I would expect each paragraph to be focused and up to the point but in this paper, there is a mix of relevant and irrelevant information.

 

Essay: UK Corporate Governance: for Profit, not for the People

Corporate governance is a system of codes designed to facilitate the responsible control of businesses[1]. This control is enacted through the board of directors and their governance of corporate values in direct relation to the shareholder’s benefit[2]. This essay seeks to assess to what extent people are a consideration in the implementation of corporate governance codes in the UK or whether shareholder benefit is the sole focus with purely pecuniary outcomes prevailing.

 

The concept of corporate governance, as the governing and control of a company by the board of directors for the benefit of its owners, is said to find credence in the writings of Berle and Means in 1932. They wrote extensively on the agency theory which espouses that with the ownership of a contemporary company instilled in shareholder value, the management of that company falls to the elected board of directors who should act as an agent of those owners[3]. Shareholder value and the subsequent payment of dividends, along with the continued trading of the corporation thus ensuring future profits, would clearly be the ubiquitous benefit for any shareholder when considering what constitutes good management by the board. However, this profit-preferring capitalist system had been in existence for many years prior to Bearle and Mean’s theorem. In the case of Hutton v. West Cork Railway Company in 1883, the company in question considered giving a gift to their workers as a means of compensation for loss of employment due to the company’s demise. The court, however, held that this went against what the company was created for – which was to generate profits for the shareholders – thus rendering the sanction of such payment unlawful[4].

 

Today, the promotion of shareholder’s rights above that of the stakeholder is the dominant theory worldwide[5] , with even the Organisation for Economic Co-operation and Development (OECD)[6] encouraging shareholder value as the primary concern of good corporate governance practices. Although, there has been those who argue that a company should be run as part of the surrounding community and therefore, for their benefit[7], there have only been half-hearted attempts by the Government and other organisations to promote stakeholder inclusion. The OECD does include the role of stakeholders in their five principles of corporate governance[8] and the Companies Act 2006 makes specific mention as to the regard that directors should have for key stakeholders when making company decisions[9]. These small inclusions are seemingly an afterthought to the greater concern that directors are required to give to shareholder’s pecuniary interest in a paean to the profit-first capitalist ideology.

 

With the plethora of shareholder-focused definitions of corporate governance from a variety of authoritative bodies, it is clear that the governing of UK corporations is decidedly in favour of profit maximisation, with only a cursory “regard to” the stakeholders directly affected by corporate behaviour. Ultimately, it is clear that the UK corporate governance codes have been implemented as a protectionist measure of profitability as opposed to the promotion of better business practices for the benefit of the people.

 

Table of Authorities

Statute

The Companies Act 2006, s.172

Cases

Hutton v. West Cork Railway Company (1883) 23 Ch D 654

 

Bibliography

Books

Berle A and Means G, The Modern Corporation and Private Propert’ (Transaction Publishers 1932).

Tricker B, Corporate Governance Principles, Policies, and Practices (3rd Edition, OUP 2015).

Mallin C, Corporate Governance (4th Edition, OUP 2012).

Wearing R, Cases in Corporate Governance (SAGE 2005)

 

Journals

L’Huillier B M, ‘What Does “Corporate Governance” Actually Mean?’ (2014) 14(3) Emerald Insight 300-319

Salacuse JW, ‘Corporate Governance in the New Century’ (2004) 25(3) Company Lawyer 69-83

 

Reports

Cadbury A, Report of the Committee on the Financial Aspects of Corporate Governance (Gee 1992).

OECD, Principles of Corporate Governance (OECD Publishing, 2004)

 

Websites

ICAEW, ‘What is corporate governance’ < http://www.icaew.com/en/technical/corporate-governance/overview/does-corporate-governance-matter> accessed 23 September 2018.

[1] A Cadbury, Report of the Committee on the Financial Aspects of Corporate Governance (Gee 1992).

[2] B Tricker, Corporate Governance Principles, Policies, and Practices (3rd Edition, OUP 2015); ICAEW, ‘What is corporate governance’ < http://www.icaew.com/en/technical/corporate-governance/overview/does-corporate-governance-matter> accessed 23 September 2018.

[3] A Berle and G Means, The Modern Corporation and Private Property (Transaction Publishers 1932).

[4] (1883) 23 Ch D 654

[5] B M L’Huillier, ‘What Does “Corporate Governance” Actually Mean?’ (2014) 14(3) Emerald Insight 300-319.

[6] OECD, Principles of Corporate Governance (OECD Publishing, 2004); J W Salacuse, ‘Corporate Governance in the New Century’ (2004) 25(3) Company Lawyer 69-83

[7] J W Salacuse, ‘Corporate Governance in the New Century’ (2004) 25(3) Company Lawyer 69-83; C Mallin, Corporate Governance (4th Edition, OUP 2012).

[8] OECD, Principles of Corporate Governance (OECD Publishing, 2004)

[9] The Companies Act 2006, s.172.

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