History of Corporate Governance or applicable topic Research Paper

History of Corporate Governance or applicable topic - Research Paper Example With time, corporate governance issues do not seem to tire of introducing certain new legislative rules ad duties that aim at governing the relationship between the stakeholders of various companies as well as their management (Morck, 2005). Furthermore, the beginning of the twentieth century saw to the formulation of sufficient codes among other best practice catalogues that are concerned with corporate governance especially in business communities with the sole aim of satisfying a variety of stakeholders. According to Steger and Amann (2008), despite the fact that the term corporate governance being as old as the various managed entities themselves, it cuts across ownership and management thereby bringing forth a principal-agent problem. The term itself gained its use in the 1980s even though the need for shareholder and owner protection against any managerial issue, existed mush earlier. In the 1970s, probably among the most important functions of the corporate instrument were est ablished to be; establishment of basic objectives, corporate strategies as well as the policies of the board (Stege & Amann, 2008). Also, it was charged with the ultimate responsibility asking various discerning questions and above all, the selection of president. Another feature of corporate governance within this time period was the pyramidal business group. In this system, the shareholders are at the apex who commands a great control over a given single company. Consequently, this company held control blocks in other listed companies. In the 1980s, the extent to which the term corporate governance spread provided an indication of the growing awareness of issues as pertaining to corporate governance. The increased attention was somewhat due to several high profile initial public offerings alongside the privatization of state parastatals. This had an impact of various industrial sectors such as telecommunication, mining and electricity in the U.K which reported a rise in the total earnings (Steger & Amann p.8). In the subsequent years, other countries that employed the same tactic such as Germany which privatized its telecom industry, also realized great profits. The increased shift of attention on issues regarding corporate governance within this period can also be associated with a number of corporate failures and scandals. As a result, corporate governance attempted to influence the stock markets which a lot of people depended much on. The stock markets remarkably increased as corporate governance provided a sense security (Morck, 2005). In the 1990s, there was a rise in awareness of corporate governance in all the central countries. There were a lot of reports, guiding principles as well as the remarkably nice practice codes that called for transparency, conformance and compliance that were issued at board level to the countries in question. These reports clearly outlined the directors’ service contracts, the effectiveness and perceived objectivity of auditing as well as the role of institutional investors. As such, this made a breakthrough corporate governance more so owing to the fact its reports became requisite for companies that were listed in the U.S by the year 1995. Corporate governance has brought with it a distinction between the executive and the supervising members of the board and the division between the chairman of the board and the chief executive officers (C.E.O). For instance, by the year 1998,