Interdependence Mechanisms Of Corporate Governance

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Name Rizki Malinda Isvaniari Putri Title of the project Interdependence Mechanisms of Corporate Governance Effect in Multinational State-Owned Enterprises 1. Introduction The state sectors have always been an important component of most economies. Recently, several state-owned enterprises (SOEs) are among the largest and fastest expanding multinational companies. They progressively compete with private firms for resources, ideas, and consumers in both domestic and international markets. Many countries manage SOEs where monopolies are treated desirable or natural. Private monopolists may produce and give price at levels which are not socially optimal, so SOEs will resolve this problem because government regulation can mitigate those though…show more content…
First, multinational companies must now deal with more demanding global shareholder and stakeholder groups that seek greater disclosure and more transparent explanations for major decisions. Second, the corporate governance of multinational companies becoming much more complex and subject to many more institutional constraints. Third, multinational companies may have several boards or executive teams at different levels or in different countries. Fourth, the corporate governance framework for multinational companies includes additional governance mechanisms, for instance are culture-based governance and discipline-based governance. Fifth, the corporate governance of multinational companies must be designed to cope with global strategy that the firm uses. The last is multinational companies face heterogeneous corporate governance standards institutionalized by different countries throughout the world. In the context of multinational companies, corporate governance is the system that not only monitors the relationship between managers and stakeholders but also directs its various globally dispersed…show more content…
Internal Mechanism of Corporate Governance Internal mechanisms of corporate governance is the way of companies to conduct a controlling by use internal structure and process, in this research the internal mechanism will be measured by board size and CEO duality. The number of directors constituting the board of a company can influence its performance positively or negatively. Larger board size provides more monitoring resources, which may enhance firm performance. Dalton et al. (1999) found the positive relationship between board size and firm performance. Otherwise, larger board size will affect coordination, communication, and decision making process become more difficult and trigger free-riding issues among the many board members. According to Eisenberg et al. (1998), there is negative relationship between board size and firm performance. H1: The size of the board directors is negatively related to firm

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