Transparency in Corporate Governance

Essay by rlundayUniversity, Master's September 2010

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Transparency in Corporate Governance

University of Phoenix


Transparency in Corporate Governance

This paper evaluates the case of McBride Financial Services, Inc (MFSI), evaluating the concept in corporate governance transparency and the relationship between self-interest of management and effective corporate governance. According to Chew and Gillan (2004, p. 73), before the 1980s, the structure of corporate governance of large corporations allowed managers to think of the corporation rather than the shareholders. The "goal was not to maximize shareholder wealth, but to ensure the growth" of the company "by balancing the claims of all important corporate stakeholders, employees, suppliers, and local communities as well as shareholders." Since 1980, corporate governance has changed dramatically with the concept of Corporate Transparency.


Corporate Transparency is defined by 12manage (2010) as a term that "reflects the idea that the more information is disclosed about organizational activities in a more timely fashion to a wider public the better it is."

McCarthy and Flynn, (2004, p. 29) states primary goal of Corporate Transparency "is to promote honest and efficient markets and informed investment decisions through full and fair disclosure." In financial reporting, transparency relates to the financial information about a company is made available and understandable to the market and its investors. Though too much transparency could hinder a corporation's competitive advantage, there must be some transparency for a free market to be efficient. American organizations are slowly overcoming the barriers of malfeasance and financial corruption of the past. Corporate governance has seen drastic changes from government regulations, through the demand for transparency has resulted in shifting its philosophy from the agency theory to creating shareholder value. The power that was once influenced by the chief executive officer (CEO) has been shifted...