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In governance we trust? Evaluating the extent to which governance policies instill trust in corporate relations between shareholder and stakeholder groups
Vrba, Minka
Vrba, Minka
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n2008_C_Vrba_minka.pdf
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Governance policies attempt to instill and maintain trust in business dealings by prescribing the responsibilities that corporations have towards their shareholder and stakeholder groups. This paper examines the extent to which corporations can be held accountable for these responsibilities, and consequently, whether governance policies can strengthen the trust relationship between corporations and their shareholder and stakeholder groups. By analysing the structure of trust, it will be shown that governance policies function as a contractual relationship between corporations and their shareholders. Such a contractual relationship heightens shareholder trust in corporations through explicating and protecting the interests of shareholders, and through providing avenues of recourse if these interests are disappointed. However, it will also be demonstrated that governance policies cannot articulate stakeholder interests in terms of the logic of the contract, and therefore, that such policies – when viewed as a contract between corporations and stakeholder groups – fail to engender trust. The argument presented offers a general critique of corporate governance policies. However, the King II report is also analysed in terms of the above structure in order to give context to the argument.
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2008
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With permission of the license/copyright holder