Corporate governance and capital flows

Talamo, Giuseppina (2010): Corporate governance and capital flows. Published in: Corporate governance. The international journal of business in society , Vol. Volume, No. Number 3 (2011): pp. 228-243.

Abstract

Today’s financial regulation is founded on the assumption that more transparency, accountability, regulation, alignment of interests of directors with long-term objectives, less corruption makes the system safe. Thus, after the recent financial and economic crisis these themes are considered necessary to restore confidence in the financial markets, to reformulate the existing corporate governance systems and mechanisms that have been inadequate, and, finally, to rethink the relationship between ethics and economy. The announcement of setting a ceiling on executive remunerations (of financial institutions that receive aid from the government) coincides with the popular disapproval of the plans on the manager incentives. The so-called golden salaries of top managers raised a number of critical questions: considering the present economic recession is it correct award bonuses and privileges to managers? considering the manager-performance ratio is right that managers receive incentives even when the targets are not met? In the light of this debate the aim of this paper is to critically analyze existing corporate governance rules which are just born with the aim to regulate and control this type of problems. Thus, a possible solution might be to make existing rules more effective o in alternative to rethink corporate governance rule? The purpose of this research is to identify the factors determining the corporate governance systems and mechanisms in a global economy. This analysis confirms the economic theory that less open countries are characterised by stronger ownership’ restrictions and a weak corporate governance’s mechanism. Conversely, Open market and investment regimes are particularly powerful instruments to attract investment in general and FDI in particular.

• Item Type: MPRA Paper
• Language: English
• Keywords: International investments, Corporate governance, Capital Flows
• Subjects: D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D53 - Financial Markets; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R3 - Real Estate Markets, Spatial Production Analysis, and Firm Location; G - Financial Economics > G3 - Corporate Finance and Governance > G38 - Government Policy and Regulation; G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers ; Acquisitions ; Restructuring ; Corporate Governance; G - Financial Economics > G3 - Corporate Finance and Governance

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