Corporate governance : in search of balance between state regulation and self-regulation
Internationally, the corporate governance arena has changed over the last 7 years as the implosion of US corporations Enron and WorldCom resulted in new legislative measures, a stronger emphasis on enforcement, greater awareness, and changed mindsets on the importance of good governance. In Ireland, the governance arena has evolved during this time with the establishment of corporate and financial regulators. While the events emanating from the US implosions have had an influence on the Irish corporate governance landscape, literature shows that industry does not generally favour state intervention. Because of the changes over the last 7 years, and because there is a lack of literature on the views and experiences of key Irish corporate governance actors, this research sought to identify Irish actors’ views on where balances lies between state regulation of corporate governance and corporations’ governance of themselves. Actors from five key elite Irish groupings, including regulators and CEOs of pics and semi-state corporations, were interviewed. In addition, Mr. Dick Thornburgh, WorldCom’s bankruptcy examiner was interviewed to obtain his insights on changes to the corporate governance landscape. The research found significant consensus that the state should be involved in the regulation and enforcement of corporate governance, that the Irish corporate governance environment is adequately regulated, and that increased awareness of corporate governance responsibilities has improved boards’ effectiveness and competitiveness. The financial and reputational fallouts from governance failures were identified as key factors in changing attitudes on the need for better corporate governance. The term “light-touch” regulation was found to be an emotive, derogatory, value-laden term, which did not have a common understanding. The research also identified criticism of regulators. Based on the research findings the study recommends five actions to improve the corporate governance environment.
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