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To what extent has corporate governance reduced the separation of ownership and control Corporate governance in its simplest form can be defined as having good management to run a company Financial Institutions Intangibles and Corporate Governance John Holland Accounting Auditing and Accountability Journal Vol 14 Number 4 2001 p 13 Unfortunately corporate governance is not that simple and includes much more than just good management Corporate governance relates to the self-regulation of an organisation through several mediums including internal and external auditors independent board members and the formation of committees to regulate remuneration audits and nomination all of which are areas of concern and are susceptible to malpractice from short-termist management Corporate Governance has come to the forefront of both the academic and business fields due to the increasing number of scandals in the 1990s including world class companies such as Enron Adelphia Worldcom and GE Understanding the Corporate Governance Quadrilateral Malla Bhasa Corporate Governance Vol 4 number 4 2004 p9 The problem of corporate governance has developed due to the increasing gap between ownership and control of an organisation management teams have been increasingly employed to run an organisation in the best interests of its owners ie its share holders The problems of corporate government arise when the rights of share holders are violated Global Corporate Governance Debates and Challenges Malla Bhasa Corporate Governance Vol4 Number 2 accessed 241204 Emerald In this instance the stake holder is the shareholder Berle and Means 1967 identified the problem of the separation and ownership cited at Accounting and Auditing Vol14 Number 4 In placing a managermanagement team in control of their organisation shareholders inevitably take on an element of risk There is a risk that the management elected may not share the same beliefs and values as they do thus the organisation may not be run exactly as the owners of a company would like The problem arises when the managerial classes create asymmetries and expropriate
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