An Analysis of Asian and Western Corporate Governance Systems: Theoretical and Operational Concerns

Abstract

The primary concept of corporate governance is with those who provide capital to the companies and its aim is to improve their returns by providing market stability. However, the political slogan of public-private partnership has become popular without implementation of theoretical dynamics of corporate governance. The UK has been an exporter of corporate legal concepts and innovations since the inception of corporate norms not only in continental Europe and emerging economies but also around the world. The British model of corporate governance struck a chord in many overseas countries; it has provided a yardstick against which standards of corporate governance in other markets are being measured. The ideas developed by the Cadbury Committee and its successors committees have received an ample importance in continental Europe and the rest of the jurisdictions particularly in emerging economies such as China, India, Pakistan and those countries which have old colonial ties with the UK. The variation of the corporate governance structure and arrangement appears in different models but the issue of managerial accountability is common everywhere. The corporate governance system in Pakistan including the Code of corporate governance based on ‘shareholders primacy theory’ that involves investors in managerial accountability of listed companies through effective and reliable disclosure to maintain good governance of listed companies and long-term market stability. In Asian economies, family dominated ownership has been playing influential role, require competitive corporate and regulatory structure. Therefore, the regulatory authority, policy makers and corporate community should also be clear that the new corporate legal framework in Pakistan should be attractive for the investors as well as provide security to the non-shareholder stakeholders through services mechanism.