The Literature of Corporate Governance Principles 2

“Whatever goes up must come down.” It is a theory that has been used for many centuries. Observing many businesses, no matter how much they flourished many business eventually face a downfall, leading to failure in businesses. Could it be that businessmen are too confident and end up being careless? Or is it a natural force of gravity? Despite the theory, the real question is, is there a way to manipulate or avoid this theory? Corporate governance is an old phenomenon that was the key to maintaining a businesses’ stability and attract foreign investments by following certain rules. The implementation to this governance was not deemed important to the Cypriot businessmen. In the 1990s, the economy in Cyprus was flourishing, and as the theory predicted, it rose and will come back down. In September 2002, the Cyprus Stock Exchange collapsed and caused many to lose their investments. Although this event has started the change in the Cypriots’ view of the Corporate Governance Principles, many companies don’t take the principles seriously, and the full benefits of these principles are not received.
Problem Statement:
Corporate Governance is a set of rules a company should follow and is the key to the reliability of corporations, financial institutions and markets, maintains the stability of the economies. (OECD, 2010) It was after the collapse of the Cyprus Stock Exchange that many Cypriots began to follow the Corporate Governance Principles. However, according to Maria Krambia-Kapardis and Jim Psaros researches, it is revealed that many companies have either fully, partially, or didn’t comply with the principles. The question that is then revealed: What are the reasons why most companies chose to or not follow most principles? What are the consequences of those who obey or disobey the principles? And what would it take for all companies of the Cypriots to show their full compliance to the Corporate Governance Principles?
Literature Theoretical...