ABSTRACT
This chapter introduces some of the academic theories surrounding corporate governance and its regulation. Theories are put forward by scholars as ways of understanding observed behaviour so as to better predict what might happen in similar situations. Corley and Gioia define theory as ‘a statement of concepts and their interrelationships that shows how and/or why a phenomenon occurs’ (2011, p. 12). An even broader definition describes theory as ‘any coherent description or explanation of observed or experienced phenomena’ (Gioia and Pitre 1990, p. 587). There are several reasons a discussion of theory is an essential part of this book. As these definitions make clear, theory and practice are closely connected: empirical evidence both inspires and tests theory. Eisenhardt (1989) reminds us of the importance of empirical research in developing testable, relevant and valid theory. Empirical evidence permits us to develop and improve theories or think about phenomena in a new manner (Bansal and Corley 2011).
