The Deterrence Theory: A Case for Enhanced Enforcement of Directors' Duties

Abstract

How to cite this paper: Akanmidu, O. (2017). The deterrence theory: a case for enhanced enforcement of directors’ duties. Corporate Governance and Organizational Behavior Review, 1(1), 25-31. http://doi.org/10.22495/cgobr_v1_i1_p3 Copyright © 2017 Virtus Interpress. All rights reserved The Creative Commons AttributionNonCommercial 4.0 International License (CC BY-NC 4.0) will be activated starting from December, 2018 followed by transfer of the copyright to the Author ISSN Online: 2521-1889 ISSN Print: 2521-1870 Received: 26.07.2017 Accepted: 19.09.2017 JEL Classification: G3, K42, K2 DOI: 10.22495/cgobr_v1_i1_p3 This article is concerned with providing a justification for effective enforcement of directors’ duties. It aims to consider whether enforcement of directors’ duties is necessary. It argues that enforcement of directors’ duties is crucial to effective corporate governance. Drawing on the deterrence theory, it argues that there is a clear link between increased enforcement and increased compliance. Enhanced enforcement of directors’ duties is essential for securing compliance; countries therefore ought to put in significant effort to develop effective enforcement mechanisms.