Corporate management: Genesis, models and problems

Corporate governance refers to the way a company is run and includes laws, rules and principles on which it is based. Corporate governance has poor history. Models of corporate governance have been developed from different cultural, historical and legal environments in which corporations do their business. There are two basic types of corporate governance in developed economies: the one-tier system, which is practiced in the United Kingdom and the United States and the two-tier system, which evolved in Germany and Japan. On the other hand, the transitional countries started developing their corporate governance under very different circumstances due to their socialism-oriented market and public property. Investments are among the main prerequisites for economic growth. The most important investment is greenfield investment, which means that foreign investors invest their money in another country to start a new business. The last, but not least important issue, is agency problem, which arises when management runs a company in the way that maximizes their own interests, while the ownership of shareholders is depreciated. This paper describes the genesis of corporate governance, its models in developed countries, its state in transitional economies and some of the main ways of controlling management and dealing with agency problems.