Corporate Governance Accounting on Organization for Economic Corporation and Development

Introduction

OECD (Organization for Economic Corporation and Development) is a special forum that provides a platform where the governments of different countries can find solutions to similar problems, compare and discuss policy experiences, coordinate internal and external policies and adopt the best practices (Jesover & Kirkpatrick 2005).

Due to the increase in globalization, national economies have become interdependent and internationally acceptable accounting and corporate governance are spreading across different jurisdictions (Huiying & Patel 2015). Good corporate governance creates business strategy and market confidence which is useful for the companies that need to gain equity capital for long term investment (Jesover & Kirkpatrick 2005).

The corporate governance structure in different countries has different characteristics and constituent elements. Researchers have identified three corporate governance models in developed capitals, out of which one is the Anglo-American model, and the other two are the German model and the Japanese model (Hansmann & Kraakman 2001). Each of these models takes into consideration major players in the business world, shareholding pattern, the regulatory framework, composition of the board, actions of corporate for shareholder approval, the interaction between key players, the requirement of disclosure for publicly listed stock corporations (Hansmann & Kraakman 2001).

With the increasing capital markets, corporate governance has become a central topic for all OECD economies and raises new ideas for economic regulation and legal forms (Jesover & Kirkpatrick 2005). The application of shareholder orientation of the Anglo-American model of corporate governance in global aspects is questionable.

The present report attempts to bring out the shareholders orientation for the Anglo-US model considering different variables in different countries.

The Anglo-American Model

Several works of literature discuss whether different corporate governance systems in different countries should converge and modify in line with the Anglo-American model or not. Some researchers believe that convergence is bound to happen for many reasons like; firstly, diversity in corporate governance practices worldwide is reducing due to globalization by modifying their governance methods in line with the most suitable model; secondly, business expansion of American multinational companies to other countries resulting in modification of corporate governance structure in the host countries in line with the Anglo-American model; finally, companies outside the US have surrendered to the pressures to adopt this model (Miles 2010). Whereas, some theorists strongly oppose the convergence stating that country-specific features such as legal systems, institutional path dependence, culture, individual political and social histories prevent convergence from taking place. They believe that various national environments influence companies differently in the strategy formation to compete in the international market (Miles 2010).

The Anglo-American model is specified by shareholding of individual, increasingly investors not related to the company, a well organized legal system fixing the responsibilities and rights of the major players including shareholders, management and directors and a simple process for interaction between corporation and shareholders (Bruner 2010). Players of the Anglo-American model are management, shareholders, directors, government bodies, self-regulatory organizations, stock exchanges and consulting firms. However, management, shareholders and directors are the major players who form the corporate governance triangle. The Anglo-American model provides a fully regulated system for interaction between corporations and shareholders (Palmer 2011).

(Some parts of the solution has been blurred due to privacy protection policy)