ERIM Research Clinic: Foundations of corporate governance

This lecture aims to explore the core tenets of the field of corporate governance. After setting out the defining conditions that establish both the academic and practical legitimacy of corporate governance research, it is argued that the field of corporate governance is focused too much on the agency problems between managers and shareholders that result from the separation of ownership and control in public companies. It is argued that the currently dominant ‘managerial disciplining model’  of corporate governance should be broadened by including: (1) the benefits of centralized decision-making and managerial authority in public firms (and other forms of enterprise organization), (2) the distinct corporate governance problems of other forms of enterprise organization, and (3) issues of legitimacy that that arise when corporate actions unlawfully or disproportionally hurt the interests of third parties outside the firm.