Connecting the Dots: Bringing External Corporate Governance into the Corporate Governance Puzzle

Ruth V. Aguilera, Kurt Desender, Michael K. Bednar, Jun Ho Lee

    Producció científica: Article en revista indexadaArticleAvaluat per experts

    253 Cites (Scopus)


    Corporate governance (CG) research has largely focused on internal governance mechanisms (i.e. the board of directors, controlling owners, and managerial incentives). However, much of this work ignores the role that external CG practices play in preventing managers from engaging in activities detrimental to the welfare of shareholders, and the overall firm. In this essay, we first review and organize current research on external governance mechanisms and integrate this siloed body of work within the broader CG equation. We explicitly focus on six external governance mechanisms: the legal environment, the market for corporate control, external auditors, stakeholder activism, rating organizations, and the media. We discuss findings showing how external governance mechanisms act both as independent forces and in conjunction with internal CG mechanisms. We conclude the review by mapping an agenda for future research on CG that better integrates internal and external governance mechanisms. Our review suggests that studying different configurations of external and internal governance mechanisms will help us to better understand what factors and conditions lead to effective CG.

    Idioma originalAnglès
    Pàgines (de-a)483-573
    Nombre de pàgines91
    RevistaThe Academy of Management Annals
    Estat de la publicacióPublicada - 1 de gen. 2015


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