... of corporate governance * Comparative perspectives and debates * The control of managerial discretion 1. The nature and scope of corporate governance A governance structure is the system which governs the relationships among a firm's managers, shareholders, employees, customers and suppliers, playing an important role in providing both incentives and controls of managerial behavior (Tran, 1998). It can be defined as 'an institutional framework in which the integrity of a transaction, or related set of transactions, is decided' (Williamson, 1996). The efficiency of a governance structure, that is, its ability to reduce transaction costs, is judged by its ability to economize on bounded rationality and to safeguard against the hazards of opportunism. Corporate governance is a term used when the focus of attention is on the governance structure of modern corporations that is on the system by which companies are directed and controlled. It refers to the set of activities which constitute the internal ...

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