International Corporate Governance – A Comparative Approach – By Thomas Clarke

• Author: Bob Tricker
• DOI: http://doi.org/10.1111/j.1467-8683.2008.00687.x
• Published date: 01 May 2008
• Date: 01 May 2008

Book Review

Thomas Clarke, International Corporate Governance – A Comparative Approach,

Routledge, London, 2007, ISBN 0-415-32310-9

(accompanying website www.routledge.com/textbooks/9780415323109)

The rich diversity of corporate governance systems and

practices around the world is splendidly explored in

this work. Differences in cultures, ownership patterns and

law are shown to be vital driving forces. The factors contrib-

uting to continuing change are also made apparent.

The governing bodies of corporate entities under the lead-

ership of their CEOs are presented as political mechanisms

and the inevitable tension in a unitary board between con-

tributing to strategic direction and monitoring executive

management is highlighted. Then the institutional aspects of

corporate governance – finance, law and markets – are

introduced. An important distinction is drawn between

those markets in which control is through equity (USA and

UK) or through debt (Germany and Japan). The significance

of more direct control through institutional investors is con-

sidered, as well as the importance in some markets of con-

trolling blocks of share holders, although it is suggested that

over time the deepening of equity markets is likely to reduce

their significance.

The analysis then concentrates on the three dominant

power centres of economic activity and corporate gover-

nance classification – Anglo-American, European and Asia

Pacific. The author properly points out that the Anglo-

American classification cloaks a myth: the two parts are no

longer homogeneous. The Anglo component (UK and all

those countries influenced years ago by the laws of the

British Empire) still bases its corporate governance on prin-

ciples, voluntary compliance with the relevant corporate

governance code or explaining why the code is inappropri-

ate. Whereas, since the Sarbanes-Oxley Act, the American

component has based its corporate governance on rules,

mandatory compliance with the law or face the penalties.

Then, having considered forces encouraging the globali-

sation of corporate governance, the book concludes with a

chapter on corporate social responsibility. This reviewer

would have welcomed more on the board’s responsibility

for strategic risk management and corporate governance in

emerging nations such as Russia, India and, particularly,

China where the author was visiting professor for a while in

Shanghai. Some very innovative developments are taking

place in China, including arrangements for the state to

appoint directors and top management of listed companies.

But the choice of what should be covered in a corporate

governance text book really depends on what you consider

the structure and boundaries of the subject to be. The focus

throughout is on public companies: it would be useful to

have had some reflection on the governance challenges of

family firms, joint ventures, subsidiary companies and enti-

ties in the not-for-profit sector. Nevertheless Clarke has

chosen an entirely appropriate focus on the forces driving

corporate governance in the dominant parts of the world.

Theoretically the author adopts what he calls a “multiple

theory” stance. The challenge of such multiple or inter-

disciplinary approaches is that they can fail to provide any

discipline at all. The author does not fall into this trap. Fol-

lowing a brief review of the principle theoretical perspec-

tives – agency, transaction cost economics, stewardship,

resource dependency, stakeholder, managerial hegemony

and class hegemony – these alternative insights are neatly

compared and contrasted in a table showing their various

viewpoints, their underlying theoretical origins (economics

and finance, organisational theories, politics and law, sociol-

ogy and politics) and the extent of the empirical support for

each. It is a salutary experience for a researcher and teacher

in the subject to have to face the paucity of its theoretical

underpinnings.

The author concludes that “adopting and synthesising

different theoretical perspectives may begin to provide a

fuller understanding of the mechanisms and processes of

corporate governance” (page 29). In this he is in line with

the call from Stiles and Taylor (2002) for reconciliation

between economic and organisational perspectives in the

belief that seemingly contradictory approaches can coexist

as theoretical explanations.

Unlike many works in the field, this book is easy to read.

The style is friendly, even chatty. The author discusses

the reasons for the failure of the classic cases – Enron,

Worldcom, Parmalat. There are many illustrative practical

examples, extracts from relevant reports, and quotes from

other authors in the field. This widespread use of quotations

from seminal contributors to the subject provides the reader

with a rich experience of alternative insights, models and

frameworks. The author also adds personal comments

which bring the text to life. For example:

252 CORPORATE GOVERNANCE

Volume 16 Number 3 May 2008 © 2008 TheAuthor

Journal compilation © 2008 BlackwellPublishing Ltd

doi:10.1111/j.1467-8683.2008.00687.x