Global Corporate Governance: The Maelstrom of Increased Complexity: Is It Possible to Learn to Ride the Dragon?
2016 (English)In: Journal of Business and Economics, ISSN 2155-7950, Vol. 7, no 3, 425-437 p.Article in journal (Refereed) Published
In the light of recent corporate scandals company failure is usually explained based on agency theory, leading to the conclusion that corporate boards and regulators must use agency theory to control management better.
The authors use institutional theory to problematize this advice. We identify the role of accounting as to give predictability, hence preventing company failure. But this predictability can be questioned; it implies stability. Albeit partly with circumstantial evidence, we question this stability with factors making the conditions for management decision-making volatile, as explained by antecedents, and leading to unmanageable entities. The implications of this volatility have consequences for corporate governance, and question the going-concern assumption, the basis of accounting.
Hence, from the dominant explanations that corrupt management, or management with different interests than the principal, leads to company failure, we evolve another chain of cause and effect: volatility, with company failure as a result. It is argued that traditional accounting rituals are unsuitable for many companies. The paper indicates a need for de-institutionalization and reconsidering of accounting practices, and particularly the fundamental assumption of going concern.
Place, publisher, year, edition, pages
2016. Vol. 7, no 3, 425-437 p.
accounting; complexity; corporate governance; going-concern; management control; information use; innovation; volatility; uncertainty
Research subject Economy, Business administration
IdentifiersURN: urn:nbn:se:hig:diva-23071OAI: oai:DiVA.org:hig-23071DiVA: diva2:1056926