KNOWLEDGE AND MODELS OF CORPORATE GOVERNANCE

The issue of corporate governance has been largely debated in the literature. Conventionally, corporate governance is viewed either from a stakeholder or a shareholder perspective. This paper discusses the informational aspects of the two models of corporate governance. The role information plays in corporate governance cannot be overstated. Agents involved in corporate governance acquire, create, use and transmit information. Therefore, how the notion of knowledge is conceived is important for the analysis of alternative systems of corporate governance. Basically, there are two types of information processing: internalization and externalization. The internalization-based information processing system corresponds to the stakeholder model of corporate governance. A shareholder model of corporate governance relies on information externalization. Externalization of information is made via the market price system.