ABSTRACT
Corporate governance (CG), laws, and regulations are important constituents of an institutional framework for thriving market economies. Although CG is defined differently in the variety of national economies, in general it involves (a) the mechanisms by which business is organized, directed, and controlled in a limited liability corporate form, and (b) the mechanisms by which corporate managers are held accountable for corporate conduct and performance. Over the past two decades, an interest in the role of CG has intensified in the academic community and among practitioners all over the world due to the competitive pressure of globalization as manifested in the creation of common economic zones, European Union (EU) in particular. In an attempt to develop a single capital market, the EU adopted common currency and freed the flow of capital, goods, services, and people across EU borders. The EU creation was accompanied by the growth and diffusion of shareholdings and increased merger activity among the largest corporations and stock exchanges, which made countries—members of the EU (EUM)—a perfect candidate for mandatory adoption of the International Financial Reporting Standards (IFRS) in 2005. In this respect, an analysis of the commonalities and differences among national CG laws and practices will be instrumental in eliminating any related barriers to the development of a single capital market by streamlining all CG regulations and practices within the EU economic zone.
