Corporate governance in the context of corporate restructuring

The purpose of this thesis is to study corporate governance through a holistic approach by reviewing how the interests of shareholders, creditors and employees are protected and constrained throughout the life of a company. The thesis begins with the view that corporate governance is a control system with both an internal and an external governance scheme. By restructuring the parameters in both schemes, I set up a three-dimensional structure to study corporate governance. I first select shareholders, creditors, and employees as three factors of the axis of subjects. I then group social political issues, contracts, and laws and regulations as factors on the axis of constraints. After that, I define the third axis as the life cycle of corporate governance, parameters on which include corporate governance in the normal life, flotations, takeovers, and insolvency. By setting up this three-dimensional structure, I argue that corporate governance must be studied through a holistic approach integrating both the institutional perspective and the life cycle of corporate governance. The institutional perspective emphasizes the importance of social political issues in shaping the combination of constraints on the interests of stakeholders. The discussion in this thesis shows that different stakeholders have different combinations of constraints in safeguarding their own interests. On the whole, the current governance institution can provide due protection to stakeholders in different phases of the life cycle of corporate governance. One implication of this discussion is that company law is not the only relevant issue in corporate governance studies. In turn, shareholder primacy is a misleading conception in the institution of corporate governance even if it is a valid argument in the specific coverage of company law. The dynamic perspective on corporate governance points out that corporate governance also develops in a life cycle pattern. It is important to realize that, similar to the widely recognized path-dependence in corporate governance in comparative governance studies, the development of corporate governance practices in any company is also a continuous process in that existing governance practices and structures may make a difference to the occurrence of the later phases in the life cycle of corporate governance. Moreover, the dynamic perspective accentuates the importance of corporate governance around insolvency compared with that of other phases. Indeed, the solvency criteria which are legally prescribed merely in financial terms can not only exclude any serious consideration of non-financial interests but also reinforce the established finance oriented governance practices. This study also provides some thoughts on the current reform of corporate governance. In general, corporate governance is a multi-disciplinary issue and reform of corporate governance practices must be carried out with both an institutional and a dynamic approach. Accordingly, corporate governance reform can only be an ongoing and piecemeal process. Any abrupt change to the established system may only do a disservice and is thus inadvisable.