Effects of Corporate Governance on International Business

Effectsof Corporate Governance on International Business:


Corporategovernance refers to ways in which firms are governed. It involvesthe distribution of responsibilities and rights of the managers andother insiders with an aim to safeguard the interests ofstakeholders. The governance principles identify the allocation ofresponsibilities and rights among different parties in the firm(Laura, 2016). With the growth of business, it becomes hard for allthe shareholders to take part in the management and therefore theneed to employ a management staff to oversee the day to dayactivities of the business (Yu, 2011). The managers are expected tohave no equity interests in the firm but left on their own withoutbeing monitored they may be tempted to pursue their interestsdifferent from those they are entrusted by the owners (Majdi &ampAli, 2016). This new practice of corporate governance has becomepopular among businesses and in academic research in the recent yearsand has been related to the great success of companies in the worldtoday (Strange and Jackson, 2016). The practice of good corporategovernance is, therefore, vital to any businesses if at all it has tocompete well globally.

Aimsand objectives


Theprimary purpose of the study is to ascertain the effects of corporategovernance on international businesses.


  • To determine the extent to which the shareholders of different firms are involved in developing the firms’ goals and objectives

  • To ascertain the performance of those firms with strong corporate governance policies in the global business by comparing it with firms with weak corporate governance policies

  • To determine the strength of firms with strong governance policies in the international stock markets

  • To relate the performance of companies before and after implementation of the corporate governance policies.

  • To make suggestions and recommendations useful for policy formulation and implementation on corporate governance.


Sekhar(2013) in his “Journalof Academic and Business Ethics: Corporate governance and firm’sfinancialperformance” researched the impact of different corporate governance variableincluding chairman of the audit committee, concentrated ownershipstructure, CEO as chairman of the board, investors and the return onassets and equity. He explores the effects of independence ofdifferent directors and managers on the performance of the business.

Johanson,(2012) “Corporate Governance and Board Accounts: Exploring aNeglected Interface between Boards of Directors and Management.Journalof Management &amp Governance.”the authors give the expected strategic layouts that the managers andCEOs of firms are supposed to practice to enable them to run theirbusinesses efficiently. They present the performance evaluationtechniques and all roles of directorship in business.

Khan(2016), in his research on “CorporateGovernance,” Hegives a broader view of what happens when the managers diverge fromthe interests of the stakeholders. He explicitly tackles the problemsarising from this occurrence. He further indicates how delegation ofduties by managers negatively affects the performance of the firms.

MariaMaher &amp Thomas Anderson (2011), “Corporategovernance: effects of firm performance andeconomicgrowth”the research examines how corporate performance affects financialperformance. It further explores the factors that promote efficientcorporate governance and also provides insight on ownershipconcentration.


Theresearch will incorporate both the qualitative and quantitativeskills to collect and analyze data. The research involvesquantitative variables and is mostly descriptive, and therefore, theneed for both research methods (John and Makhija, 2011). The natureof study calls for stratified sampling which will include 50different firms that participate in the global business. Theinstruments for data collection contains closed questionnaires, focusgroups, and direct interviews to obtain information.


Theclosed questionnaires shall be distributed among the sampledrespondents either by mail or manually. In the case of illiteraterespondents, the personal interviews shall be conducted, andinformation entered in the questionnaire (Hitt, Ireland andHoskisson, 2015). Where the respondents are not available phoneinterviews shall be carried out and information recorded.


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Johanson,D. (2012). Corporate governance and board accounts: exploring aneglected interface between boards of directors and management.Journalof Management &amp Governance,12(4), pp.343-380.

Khan,H. (2016). ALiterature Review of Corporate Governance.1st ed. [eBook] Singapore: IACSIT Press, pp.1-5. Available at:http://www.ipedr.com/vol25/1-ICEME2011-A10015.pdf [Accessed 4 Oct.2016].

LauraGeorg (2016). “Information security governance: pending legalresponsibilities of non-executive boards.

MajdiA.Quttainah, Ali R. Almutairi (2016). “Evidence from Islamic banks”CorporateEthics

MariaMahe &amp Thomas Anderson (2016). “Effects of Firm Performance andEconomic Growth” Journalof Corporate Governance.

SekharMuni Amba (2013).”Corporate governance and firm’s financialperformance”Journal of Academic and Business Ethics.

WaseemAl-Haddad, Saleh Taher Saurian, Fares Jamil Al-Sufy (2011). “TheEffect of CorporateGovernanceon the Performance of Jordanian Industrial Companies”International Journal of Humanities and Social Sciences

Strange,R. and Jackson, G. (2016). CorporateGovernance and International Business Strategy, Performance andInstitutional Change.1st ed. [eBook] 175 Fifth Avenue, New York, N.Y. 10010: PALGRAVEMACMILLAN, pp.17-25. Available at:http://www.palgraveconnect.com/pc/doifinder/view/10.1057/9780230285743[Accessed 4 Oct. 2016].

Yu,P. (2011). International(corporate) governance.Hauppauge, N.Y.: Nova Science Publishers.