Local Repairs in Light of Global Ideals: Corporate Governance Reforms and Firm Ownership around the World

Abstract

Agency theory’s principal-agent corporate governance model has taken the fields of financial economics and management studies by storm since it was first introduced by Jensen and Meckling (1976). Its employment by scholars of both denominations has since then largely shaped the language that we employ to describe the modern corporation (Lubatkin, Lane, Collin, & Very, 2005). In fact, the large industrial corporation is primarily discussed, both in the business press and by security analysts, using such financial terms as “debts,” “assets,” and “cash flow” (Fligstein & Freeland, 1995). In turn, managers and owners of firms have largely begun to see their firms in exactly the same way (Useem, 1993). Firms in the United States and the United Kingdom are particularly evaluated according to a financial economics framework, and governed in light of a financially inspired view of the modern corporation (Fama, 1980; Fama & Jensen, 1983; Roe, 1994).