Corporate Governance Against Recommendations: The Cases of the Strong Executive and the Strong Ownership
There are several basic configurations of corporate governance according to the separation of ownership and control (Jensen’s theory). Effective governance is described as a situation whenan owner (or group of owners) keeps the right to ratify and monitor strategic decisions while management has the...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
| Published: |
Tomas Bata University in Zlín
2012-09-01
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| Series: | Journal of Competitiveness |
| Subjects: | |
| Online Access: | http://www.cjournal.cz/files/107.pdf |
| _version_ | 1818582839769169920 |
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| author | Král Pavel Tripes Stanislav Pirožek Petr Pudil Pavel |
| author_facet | Král Pavel Tripes Stanislav Pirožek Petr Pudil Pavel |
| author_sort | Král Pavel |
| collection | DOAJ |
| description | There are several basic configurations of corporate governance according to the separation of ownership and control (Jensen’s theory). Effective governance is described as a situation whenan owner (or group of owners) keeps the right to ratify and monitor strategic decisions while management has the right to initiate and implement those decisions. There are two particular situations how this recommendation is partially broken and both situations are linked to CEO duality. The first case happens when an owner loses or does not exercise the right to monitor management of the organization and is termed as the strong executive. The second case is calledthe strong ownership and is distinguished by an owner taking over implementations of the decisions. The focus of the study was to explore particularly configurations of the strong executive and the strong governance. A mixed method research design was chosen to explore the differences between the basic governance configurations. The sample was chosen by purposive sampling and covered a hundred for-profit organizations of all size and from all sectors of economy.The data were collected through interviews with representatives, mainly members of top management. We revealed that both of these configurations can bear good corporate performance but also bigger risks. The strong executive is typical for organizations with dispersed ownership or a publicly owned organization and the performance of the organization is fully dependent on competencies but also personalities of managers. This configuration contains a high risk of misuse of authority. The strong ownership is effective in small organizations while in a larger organization leads to an overexertion of owners and low performance because they usually faceproblems to keep focus on the strategic issues of the organization. |
| first_indexed | 2024-12-16T07:55:46Z |
| format | Article |
| id | doaj.art-8a56ee14a043488f9ee32cc2d89c5af1 |
| institution | Directory Open Access Journal |
| issn | 1804-171X 1804-1728 |
| language | English |
| last_indexed | 2024-12-16T07:55:46Z |
| publishDate | 2012-09-01 |
| publisher | Tomas Bata University in Zlín |
| record_format | Article |
| series | Journal of Competitiveness |
| spelling | doaj.art-8a56ee14a043488f9ee32cc2d89c5af12022-12-21T22:38:43ZengTomas Bata University in ZlínJournal of Competitiveness1804-171X1804-17282012-09-01434657Corporate Governance Against Recommendations: The Cases of the Strong Executive and the Strong OwnershipKrál PavelTripes StanislavPirožek PetrPudil PavelThere are several basic configurations of corporate governance according to the separation of ownership and control (Jensen’s theory). Effective governance is described as a situation whenan owner (or group of owners) keeps the right to ratify and monitor strategic decisions while management has the right to initiate and implement those decisions. There are two particular situations how this recommendation is partially broken and both situations are linked to CEO duality. The first case happens when an owner loses or does not exercise the right to monitor management of the organization and is termed as the strong executive. The second case is calledthe strong ownership and is distinguished by an owner taking over implementations of the decisions. The focus of the study was to explore particularly configurations of the strong executive and the strong governance. A mixed method research design was chosen to explore the differences between the basic governance configurations. The sample was chosen by purposive sampling and covered a hundred for-profit organizations of all size and from all sectors of economy.The data were collected through interviews with representatives, mainly members of top management. We revealed that both of these configurations can bear good corporate performance but also bigger risks. The strong executive is typical for organizations with dispersed ownership or a publicly owned organization and the performance of the organization is fully dependent on competencies but also personalities of managers. This configuration contains a high risk of misuse of authority. The strong ownership is effective in small organizations while in a larger organization leads to an overexertion of owners and low performance because they usually faceproblems to keep focus on the strategic issues of the organization.http://www.cjournal.cz/files/107.pdfCorporate governancestrong executivestrong ownershipCEO dualityGovernance in CEE countries |
| spellingShingle | Král Pavel Tripes Stanislav Pirožek Petr Pudil Pavel Corporate Governance Against Recommendations: The Cases of the Strong Executive and the Strong Ownership Journal of Competitiveness Corporate governance strong executive strong ownership CEO duality Governance in CEE countries |
| title | Corporate Governance Against Recommendations: The Cases of the Strong Executive and the Strong Ownership |
| title_full | Corporate Governance Against Recommendations: The Cases of the Strong Executive and the Strong Ownership |
| title_fullStr | Corporate Governance Against Recommendations: The Cases of the Strong Executive and the Strong Ownership |
| title_full_unstemmed | Corporate Governance Against Recommendations: The Cases of the Strong Executive and the Strong Ownership |
| title_short | Corporate Governance Against Recommendations: The Cases of the Strong Executive and the Strong Ownership |
| title_sort | corporate governance against recommendations the cases of the strong executive and the strong ownership |
| topic | Corporate governance strong executive strong ownership CEO duality Governance in CEE countries |
| url | http://www.cjournal.cz/files/107.pdf |
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