TY - JOUR
T1 - Connecting the Dots
T2 - Bringing External Corporate Governance into the Corporate Governance Puzzle
AU - Aguilera, Ruth V.
AU - Desender, Kurt
AU - Bednar, Michael K.
AU - Lee, Jun Ho
N1 - Publisher Copyright:
© 2015 Academy of Management.
PY - 2015/1/1
Y1 - 2015/1/1
N2 - Corporate governance (CG) research has largely focused on internal governance mechanisms (i.e. the board of directors, controlling owners, and managerial incentives). However, much of this work ignores the role that external CG practices play in preventing managers from engaging in activities detrimental to the welfare of shareholders, and the overall firm. In this essay, we first review and organize current research on external governance mechanisms and integrate this siloed body of work within the broader CG equation. We explicitly focus on six external governance mechanisms: the legal environment, the market for corporate control, external auditors, stakeholder activism, rating organizations, and the media. We discuss findings showing how external governance mechanisms act both as independent forces and in conjunction with internal CG mechanisms. We conclude the review by mapping an agenda for future research on CG that better integrates internal and external governance mechanisms. Our review suggests that studying different configurations of external and internal governance mechanisms will help us to better understand what factors and conditions lead to effective CG.
AB - Corporate governance (CG) research has largely focused on internal governance mechanisms (i.e. the board of directors, controlling owners, and managerial incentives). However, much of this work ignores the role that external CG practices play in preventing managers from engaging in activities detrimental to the welfare of shareholders, and the overall firm. In this essay, we first review and organize current research on external governance mechanisms and integrate this siloed body of work within the broader CG equation. We explicitly focus on six external governance mechanisms: the legal environment, the market for corporate control, external auditors, stakeholder activism, rating organizations, and the media. We discuss findings showing how external governance mechanisms act both as independent forces and in conjunction with internal CG mechanisms. We conclude the review by mapping an agenda for future research on CG that better integrates internal and external governance mechanisms. Our review suggests that studying different configurations of external and internal governance mechanisms will help us to better understand what factors and conditions lead to effective CG.
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U2 - 10.1080/19416520.2015.1024503
DO - 10.1080/19416520.2015.1024503
M3 - Article
AN - SCOPUS:84930920989
SN - 1941-6520
VL - 9
SP - 483
EP - 573
JO - Academy of Management Annals
JF - Academy of Management Annals
IS - 1
ER -