Strengthening the Governance Process II: Macro Reforms

Abstract

We noted in the last chapter a series of micro reforms that individual companies must consider in order to strengthen their monitoring and control processes. We now turn our attention to macro enhancements that can assist in the reform movement. A systemic framework that establishes or enhances market mechanisms promotes better standards and imposes stricter discipline, benefiting individual companies and their stakeholders as well as broader industrial sectors and economies. How such global macro reforms should be implemented is, of course, a complicated issue and still the subject of much debate.¹ Although corporate governance specialist groups, industry bodies, academics, regulators, listing exchanges, and others are constantly attempting to advance various reforms, national corporate systems are so unique and complex that efforts are likely to develop and expand very gradually. In this chapter we consider several key areas of macro reform, summarized in Figure 10.1, including those centered on:

• promoting changes in regulatory oversight

• strengthening legal and bankruptcy systems

• deepening local/national capital markets and encouraging corporate control activity

• enhancing external audit practices