The role of financial regulation in influencing the development of corporate governance principles in the United Kingdom (UK) and throughout Europe has become an important policy issue that has received little attention in the literature. To date, most research on corporate governance has addressed issues affecting companies and firms in the nonfinancial sector. Corporate governance regulation in the financial sector traditionally has been regarded as a specialty area with standards and rules fashioned to achieve the overriding objectives of financial regulation—safety and soundness of the financial system, and consumer and investor protection. In the case of banking regulation, the traditional principal–agent model used to analyze the relationship between shareholders, directors, and managers has given way to
broader policy concerns to maintain financial stability and to ensure that banks operate in a way that promotes broader economic growth and enhances shareholder value.