Do Current Corporate Governance Practices Help Protect Investors’ Interests in Canada

“Do Current Corporate Governance Practices Help Protect Investors’ Interests in Canada?” In the year 1720, the British parliament passed the Bubble Act. The act was passed to improve corporate governance and provide investor the protection from the companies making extravagant rumours to inflate stock prices. Over the years, many laws have been framed worldwide for protecting the shareholders from manipulations by management. The year 2002 witnessed very big corporate scandals such as Enron, Global crossing and Tyco. These scandals cost heavily on the investors to the tune of billions of dollars which resultantly eroded the confidence of investors’ in the security market both in the United States and other parts of the world. This necessitated the need for special legislation relating to corporate governance which led to the passing of Sarbanes Oxley Act in the United States of America. This act became famous worldwide and was considered as an epitome of governance standards in the corporate world. However, the Canadian corporate governance model is significantly different from that of the United States, so the same kind of strict legislation could not be enforced to improve the corporate governance standards in Canada. This essay examines the role of corporate governance in protecting the investors’ interests in Canada. Firstly, I will discuss how corporate governance measures are necessary to protect the interests of investors. Secondly, I will discuss the unique nature of Canadian multi- jurisdictional corporate governance model. Thirdly, I will highlight the particular characteristics of the corporate ownership in Canada. Finally, I will suggest measures to improve corporate governance which can help build up Canadian security market by bolstering investor base both nationally and internationally. The most popular study similar to this topic was conducted by Rafael la Porta, who concluded that legal environment of a country,

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