Behaviour and rationality in corporate governance
Discusses issues of corporate governance following the Enron and other scandals. Focuses on policy reforms and the independence of reputational intermediaries in the monitoring model of corporate governance. Questions the traditional economic approach to such issues which is based on the rational actor using available information to make judgements which then guide their decisions. Suggests that conventional proposals to reform corporate governance through legislation, codes of best practice, and the like are necessary, but underestimate the pressures which reputational intermediaries face from inevitable conflicts of interest and bias in judgement and decision-making. Demonstrates how a behavioural perspective can add value to the rational actor model of conventional economics to better understand the causes of failures in corporate governance