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From Value Protection to Value Creation: Rethinking Corporate Governance Standards for Firm Innovation

Barker, RM; Chiu, IHY; (2018) From Value Protection to Value Creation: Rethinking Corporate Governance Standards for Firm Innovation. Fordham Journal of Corporate & Financial Law , 23 (2) pp. 437-502. Green open access

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Abstract

A company’s pro-innovation needs are often met by the exploitation of its resources, widely defined. The resource-based theory of the firm provides immense empirical insights into how a firm’s corporate governance factors can contribute to promoting innovation. However, these implications may conflict with the prevailing standards of corporate governance imposed on many securities markets for listed companies, which have developed based on theoretical models supporting a shareholder-centered and agency-based theory of the firm. Although prevailing corporate governance standards can to an extent support firm innovation, tensions are created in some circumstances where companies pit their corporate governance compliance against resource-based needs that promote innovation. In the present context of steady internationalization and convergence in corporate governance standards in global securities markets towards a shareholder-centered agency-based model, we argue that there is a need to provide some room for accommodating the resource-based needs for companies in relation to promoting innovation. We explore a number of options and suggest that the most practicable option would be the development of recognized exceptions that deviate from prevailing corporate governance standards. We further suggest as to how an exceptions-based regime can be implemented in the U.K. and U.S., comparing the rules-based regime in the U.S. with the principles-based regime in the U.K.

Type: Article
Title: From Value Protection to Value Creation: Rethinking Corporate Governance Standards for Firm Innovation
Open access status: An open access version is available from UCL Discovery
Publisher version: https://ir.lawnet.fordham.edu/jcfl/vol23/iss2/2/
Language: English
Additional information: This version is the version of record. For information on re-use, please refer to the publisher’s terms and conditions.
Keywords: Corporate Governance, Shareholder, Securities, Compliance
UCL classification: UCL
UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of Laws
URI: https://discovery.ucl.ac.uk/id/eprint/10041960
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