Corporate governance Clearly, the effectiveness of the system of corporate governance is important in overall corporate performance. Adoption of new technology may require considerable effort and short-term expense, and it is important that managers have the appropriate incentives to search for improvements that reduce costs over the longer-term.
In recent years, aggressive cost-cutting in the United States has been linked to greater emphasis on maximization of shareholder value and less on growth and diversification which was more prominent in the 1970s and 1980s. This shift in perspective appears to have been driven, at least in part, by the increasing dominance of large institutional investors in US financial markets.