Corporate governance systems as dynamic institutions: Towards a dynamic model of corporate governance systems

Taking note of the evidence in extant literature that corporate governance systems are designed to incentivise, monitor, and guide agents to achieve firm mission, this paper develops a dynamic model of corporate governance systems that views these systems as artificial realities (Simon 1996) in general, and institutions in particular. The paper suggests that viewing these systems as institutions has theoretical and practical implications for the study and design of these systems, and illuminates how the process of double hermeneutic may explain the link between corporate governance research and policy recommendations to date and the US sub-prime crisis of 2007 onwards.