Global Financial Crisis and State’s Social-Economic Differences – a Deterrent to Corporate Governance Convergence?

Abstract

Various socio-economic incidences have placed a strain on the abilities of global organization to effectively implement a corporate convergence, the challenge that continues to have impact on the cross-border business transactions. Couple with the Enron, World-Com, Pamlat, Nortel Networks and many other financial scandals that plagued multinationals, each nation has kept mum on the convergence of corporate governance systems rather, they have implemented a divergent approach that encourages individualism over collectivism. The actions of the European Union through the International Financial Corporation has focused on establishing directives to enhance transparency, for greater shareholder engagement and to support company growth and competitiveness. Other programs and institutions were launched to further support effective corporate governance across European union countries. Organization of Economic and Community Development (OECD), Basel Committee for Banking (BCBS), EU developments, Investor developments, Accounting, Audit, and Ethics Standards developments are some of the recent developments across Europe. In America, programs like Sarbanes Oxley (SOX), Dodd Franklin were important legislation aimed at curbing financial misappropriation and lack of transparency in publicly traded companies. In Ontario Canada, Bill 198 was implemented to protect investors against fraud. For the purpose of this project, emphasis will be laid on the convergence of the corporate governance. Can it be achieved, and under what circumstances can there be a global convergence of corporate governance. What are the constraints, and the possible solutions? The pace at which the globalization is connecting the world together on a common market place called cyberspace, the need to have a convergent corporate governance that will outlaw divergent, and or, the peculiarities of divergence over convergence. Can the two work together, yet able to address the concerns of differences in legal, cultural, ownership, actors and other structural differences. In the end, recommendations will be proposed on the best strategy to unite the global organizations around common corporate governance systems.