Two-Tier Corporate Governance Model for Pakistan
Tasleem Faraz Minhas1, Saif Ullah2
1 Research Scholar, National University of Modern Languages, Lahore
2 Faculty members in Management sciences, National University of Modern Languages, Lahore
As the business environment is continuously evolving so as the concept of corporate governance. The European Economic Community (EEC), General Agreement on Tariffs and Trade (GATT) and World Trade Organization (WTO) regulations have also contributed to the rising awareness and are compelling us to think in terms of adhering to the good governance practices. Corporate governance, by the very nature of the concept, cannot be ...view middle of the document...
There is a related but separate thread of discussions whose focus is on the conduct of a corporate governance system in economic efficiency, with a strong emphasis on shareholders' welfare. The subject is gaining importance in the world especially after crisis of Enron and WorldCom. In 2002, U.S. federal government passed the Sarbanes-Oxley Act, intending to restore public confidence in corporate system.
The various global corporate governance models spread out as economies which then lead to a corporate structure. The major and the most important reasons of modifications in the corporate governance models were environmental influences such as worldview, culture, and the legislative and political framework (Shleifer
1997). Thus, the foremost and basic aim of these models are to achieve the particular objectives as well as to maximize efficiency, economic benefits, shareholder wealth and the protection of minorities. Pakistan is a specific area in point where corporate governance is emerging and developing day by day. The economy is essentially in a state of metamorphose -simultaneously growing, developing and being transformed from a command system to a market economy. A significant recent driving factor of this transformation is the concurrence of Pakistan to the World Trade Organization (WTO).
Corporate Governance in Pakistan: There is a growing interest in the concept of corporate governance in Pakistan, mainly because the corporate governance is a key to developing a market economy and civil society in transitioning economies such as Pakistan. Globalization, the need to attract foreign investment to ensure the sustainable development of Pakistan, maintaining the performance excellence of the stock exchanges, recent corporate scandals such as the Crescent Standard Bank, greater transparency in financial reporting and shareholders’ rights protection and the maximization of their wealth – to name a few, are among the incentives for enhanced standards of corporate governance. Although the Corporate Governance is a hot topic of conversations for directors of large companies and in government circles in Pakistan, but still there is a notable lack of consensus about why corporate governance is important. There are two groups of people having different perceptions about the corporate governance. One says that it is just a passing fashion and a necessary evil to put up with, while the other group says that it is fundamental to what a company does, how it achieves its objectives and how it works in the interest of its shareholders, in short they consider it as a set of guidelines for an organization to proceed a head.
Objectives of the study: The main objective of the study is to find the framework for appropriate corporate governance model for Pakistan. The specific objectives of the research are to:
I. Review of various Corporate Governance models which are contributing to the developed and developing economies.