The deterrence theory: A case for enhanced enforcement of directors’ duties

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.