​Addressing Imbalances and Limits of Self Regulation: Corporate Governance Mechanisms and Cooperative and Competitive Enforced Self Regulation (Extended Abstract and References)

Abstract

In its aims to illustrate the limits and potentials of self regulation, this book not only makes reference to the Enforced Self Regulation model, but also the Competitive and Cooperative Enforced Self Regulation model. In so doing it aims to consolidate on previous results derived from previous research by the author. Furthermore it aims to contribute to present and previous literature on the topic of self regulation by incorporating an aspect which was not really addressed under the Enforced Self Regulation model, namely, the regulation of self regulated firms by professional self regulated bodies such as professional accounting bodies which are involved in the issuing and enforcement of financial reporting standards. Through the Enforced Self Regulation model, the role played by government in the direct monitoring of firms is highlighted. In incorporating the Co-operative and Competitive Enforced Self Regulation model, it attempts to draw attention to the fact that the absence of effective enforcement mechanisms will restrict the maximization potential of such a model.

As well as accentuating how corporate responsibility and accountability could be fostered through monitoring and the involvement of governments in the regulation of firms, this book aims to further consolidate on, as well as explain how corporate governance structures which operate in various systems function (and attempt) to address gaps which may arise as a result of lack of adequate mechanisms of accountability. Even though self governance is criticized based on several grounds, which include namely, costs involved in monitoring management’s actions in ensuring that their goals are kept closely aligned with those of the investors and stakeholders of the firm, as well as the ultimate objective of maximization of the enterprises’ profits, other arguments and justifications in favor of self governance may well supersede those which serve to discredit the merits and potentials of self regulation and self governance.

Keywords: corporate social responsibility, financial reporting standards, audit committees, self regulation, principal agent theory