ABSTRACT
The separation of ownership and control is one of the core and most controversial attributes of Anglo-American corporate governance systems. Different jurisdictions have developed their own understandings of corporate governance models. It is not easy to classify countries’ corporate governance systems, but probably the most useful classification is the insider model versus the outsider models. The provision of controlling rights to shareholders is justified by reference to the specific characteristic of their contracts and the fact that shareholders are the most vulnerable to corporate decisions. The theory normatively claims that the board should have the ultimate authority and should be at the centre of corporate governance. The institution of the corporate board has gradually been regarded as an important means to address agency cost problems in public companies. The board of directors fails to obtain sufficient information to evaluate the complexities of corporate transactions undertaken by management and to sufficiently criticise and challenge management in the boardrooms.
