Case Study On Corporate Governance

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Introduction

This chapter presents an overview of the research topic as an introduction to the study. In this chapter, background of study will be discussed and followed by the study’s “problem statement”, “research objectives”, “research questions”, “research framework”, “significance of study” and the terms definition used in this study.

Background of Study

Corporate Governance (CG) is a mechanism used by corporation to govern the company’s direction. Most large corporation used CG to control and direct the company by adopting the four principles of CG that is fairness, accountability, responsibility and transparency that has been established through the United Kingdom’s Cadbury Report.

The fall of Enron in October 2001 has shocked the world when the scandal has led to Enron Bankruptcy and was cited as the biggest audit failure in American history by Bratton, 2002. This is followed by Malaysian case, Silver Bird Group Bhd. in 2012 when Silver Bird Group Bhd.’s two former directors who were charged with 134 counts of cheating a bank of RM67.4 million reported by The Sun Daily, 2012.

Due to series of large corporation fraud in the United States (US),
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According to Yatim, Normahiran and Haslinda Yusof in their article Governance Structure and Practice in Malaysia: Board of Directors’ Role and Responsibilities in 2014 (p. 199), “the ideal Board is built based on the legal framework to raise standards beyond compliance to a level where the spirit of best practices and their intent are fully embraced”. Good corporate governance values adds importance to the company which is to ensure an “internal culture” that promotes “good corporate governance”. Hence, the Board should be independent and it must be separated from the other roles as laid out by the CG best
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