Introduction
Business success is comprised of many factors such as cheap labour, raw material, technology innovation and etc. When the firm is in financial trouble, many people might look at the result of the cost of production or business atmosphere without considering how the business decision is made. This paper is about the Corporate Governance. Corporate Governance is about the relationship between the company management team and their shareholder/stakeholders. It is about the system of check and balances of the power. A good corporate governance system is exercised by the shareholders who give power to those best able to use it, and to remove it if they use it poorly or evilly. There might be many factors for the corporate success but we cannot deny that efficient corporate governance is one of major factors to help the company to survive and prospers.
There is much discussion of deficiencies of market system in delivering effective governance because business decision is affected by the relationships among participants in the governance system. The good corporate governance is a system to ensure the effective management meets the interest of the parties. Controlling shareholders is the people who has the rights to influence the corporate behaviour, therefore, shareholders, which could variously be individual, family holding, banks, financial institutions, supplier company, and etc, has the rights to vote or choose their management to run their company at their best interest. The problem of principle-agent or in the other words the problem between management and shareholder when shareholder believe that their company is not properly run, corporate governance assisted by the company law is the subject to solve this problem. Corporate governance has a tremendous impact to the people in the company or even larger extent. Good corporate governance system is considered to be an important element for the company success then a combination of a success company that result from practicing good corporate governance will reflect the country economic conditions.
The implication of the companies’ performance is important to consider from a macroeconomic point of view. The success or failure of the company has an impact not only to the employee of the company but it is also to the shareholders and community as well. For instance, in 2013 there were approximately 20,000 publicly held corporations in US trading in various markets, generating a market capitalisation of over $ 20 trillion. Stock market capitalisation of United States corporations represents approximately 115 percent of Gross Domestic Product”. Assuming if these corporations go bankrupt without improper decision making process or without good check and balance, then it would hardly imagine the implication of it.
Each country has its own corporate governance system. Some country’s corporate governance system may be similar and many may be totally different. These differences result from different culture, social and legal structures, management style and etc. In the past, corporate governance system of one country had seem to be excellent while others had considered to be poor, but a decade after, the system that had been seemed to be excellent, has driven the country economic condition to the cliff and the “used to be a poor system “ has unveiling the country to the heaven. As this paper pointed out earlier that the corporate governance is not the only key to drive the company success or failure but it is an importance element for each company to carefully adopt and learn about corporate governance in which it will increase company performance.
The effective corporate governance rely much on the role of the private sector but the public sector itself also have a responsibility in designing the rule and legal standard for the company practices to be more efficient, transparent, responsible, accountability, and fairness. There has been a discussion that the corporate governance system should be harmonised, however, anyone who wants to harmonise the system should be very careful to introduce any approach because any universal pattern without understanding the long development of each country legal, cultural and basic business practices because it might be impracticable to every countries. As previously mentioned, that each country that has its own economic and business practices which vary from ownership structures, business circumstances, competitive conditions, corporate life cycle and many other factors, therefore, some of the universal corporate governance that has rashly been introduced may seem to be excellent for some country to adopt while others might not. For instance, most academics believe that transparency may be the key word for the business success, however, initiating without careful approach especially when their internal regulation is not ready for all these changes could be a disaster. Moreover, if the harmonisation of corporate governance system did happen, then new laws must be carefully formulated, interpreted, and mastered by many academic, incorporation documents, corporate charters, and if it is based on older rules, it must be revised.
Because of the differences in corporate governance structure especially the shareholder and legal structure and cultural differences in different country has resulted of the differences of corporate governance system. Given the examples in this paper will show that any attempt to set a universal governance system does not seem to fit with every country. However, if harmonisation means the basic rule or principle that the academic believe these basic rule or principles does provide some elements that can give the efficiency and effectiveness of the management in pursuing the interest of the company and shareholders/stakeholders, it should be carefully introduced as mentioned and any political pressure from any particular country or any organisation should be left out. Understanding the business culture and atmosphere of each country is a must before introducing any approach. This paper will give an aspect of corporate governance before distinguishing 3 different corporate governance systems in 4 different countries: Anglo-Saxon style (USA and UK), Japan, and Germany so it gives a better picture of differences in corporate systems in each country. Moreover, the example will illustrate that even under the same and different in governance system but because of different culture and business structure specially share ownership and the social value has form different in corporate governance system.