This paper outlines the conceptual, contextual and disciplinary scope of the rapidly evolving topic of corporate governance. The aim of this paper is to make a study of different theories and models of corporate governance that have been used globally by analysing strengths and weaknesses for each one. This is to determine which one is the best theory and model and if it can be adopted to different economic systems. Corporate governance theory has tended to look to this theory to guide the decisions of the board of directors in curbing excessive executive power in the hands of management. While useful for this purpose, the Agency Theory provides limited guidance on corporate governance in real life situations which are far more complex. With the blurring of the roles of the principal and the agent, the currently prevalent governance framework, based on the Agency Theory has become self limiting and ineffective. Efforts to supplement the Agency Theory with alternative theoretical frameworks such as the Stakeholder Theory and the Stewardship Theory have, at times, tended to place the board of directors in conflict with their legal obligations to work in the interests of the shareholders. A governance model based on the concept of Trusteeship, while providing fresh insights, suffers from problems in implementation and remains a goal . These alternative frameworks have, therefore, not been of much practical use to the board members in helping them to decide what constitutes the “right†decision. We need new theoretical insights that will take us towards a comprehensive theory of governance. This paper seeks to highlight the various theoretical frameworks for corporate governance.
CORPORATE GOVERNANCE THEORY AND MODEL : A CONCEPTUAL OBSERVATION
