What is Corporate Governance? Corporate governance is the policies, rules and regulations, by which a corporation shapes the way corporate officers, managers, and stakeholders perform their duties to create wealth for the entity. According to Lipman (2006), good corporate governance helps to prevent corporate scandals, fraud, and potential civil and criminal liability of the organization (p. 3). Most companies, whether formal or informal, have some type of corporate governance for the management to follow. Large companies will have a formal set of rules and regulations, while small companies frequently have spoken rules often due to lack time to form any type of formal policies. There is often no corporate governance with family owned companies. History of Corporate Governance Individuals joined together to make profits dating back to the 16th and 17th century, by funding explorers to the new world looking for wealth, riches, and fortunes. These early joint ventures had no formal agreements or laws governing their transactions. A simple hand shake and verbal agreement was sufficient. The early laws of incorporation came in to being in the late 19th century, but there was not corporate governance. During the Roaring ‘20’s the United States experienced great economic growth with the average American investing in the Stock Exchange. The failure of the Stock Exchange and the Great Depression called attention to how companies were governed, but there still was a lack of a presence of corporate governance. During World War II, many corporations were taken over by the government for the production of war related materials. The term for taking over the corporations is: they went from making butter to making guns. Rockol... ... middle of paper ... ...mpany Accounting Oversight Board (PCAOB) tasked with the oversight of audit of publicly traded companies under the authority of the SEC. The report card is still out on the new law as to whether it will cause change in the corporate office and the corporate governance. Works Cited Cheffins, B. R. (2011). The history of corporate governance. Rochester, Rochester: Retrieved from http://search.proquest.com/docview/919448295?accountid=34899 Distelzweig, H. (2012). Organizational Structure. Retrieved from http://www.referenceforbusiness.com/management/Ob-Or/Organizational-Structure.html Kraft Foods Company. (2012). http://www.kraftfoodscompany.com/Brands/largest-brands/index.aspx Lipman, F. (2006). Corporate governance best practices. Hoboken, NJ: John Wiley & Sons, Inc. SEC public law 107-204. (2002). Retrieved from http://www.sec.gov/about/laws/soa2002.pdf
In the 19th century states reduced the requirement for business to incorporate from business partnership and this made it possible for entrepreneurs to invest in large scale since the corporations were issuing stocks and certificates. Through the issuing of stocks, most business individuals pooled resources and invested in new ventures (Chandler, 1985).
Trusts were essentially agreements between businesses of any certain market to be anti-competitive in relation to one another. The problematic methods and techniques they used included rigorously lowering prices, “buying out competitors, forcing customers to sign long-term contracts, [and] forcing customers to buy unwanted products to receive other goods (“Sherman” 1). For example, financier J. P. Morgan captured the business opportunity presented by the Depression of 1893, which occurred for the same reason as the Depression of 1873—more goods had been produced than could be sold as a result of excessive expansion. Morgan acquired many railroads that had declared bankruptcy (“Domination” 2), as well as buying Andrew Carnegie’s Carnegie Steel in 1901 (Keesee 356).
Blair, Margaret M. (1995) Ownership and Control: Rethinking Corporate Governance for the Twenty-First Century. Washington, DC: Brookings.
According to Mallor, Barnes, Bowers, & Langvardt (2010) “modern corporation law emerged only in the last 200 years, ancestors of the modern corporation existed in the times of Hammurabi, ancient Greece, and the Roman Empire. As early as 1248 in France, privileges of incorporation were given to mercantile ventures to encourage investment for the benefit of society. In England, the corporate form was used extensively before the 16th century. In the late 18th century, general incorporation statutes emerged in the United States” (p. 1009).
Graham, John R., Sonali Hazarika, and Krishnamoorthy Narasimhan. "Corporate Governance, Debt, and Investment Policy during the Great Depression." NBER. National Bureau of Economic Research, 2011. Web. 24 Apr. 2014.
The PCAOB has the authorization to provide rules governing the following areas; ethics, independence, and quality control for any registered accounting firm...
The federal government issued thousands of contracts to make war goods. The largest beneficiaries of the government's largesse were the existing large corporations. "The big got bigger," Norton tells us, and the government "guaranteed profits in the form of cost-plus-fixed fee contracts, generous tax write-offs, and exemption from antitrust prosecution." Large universities received research contracts. Farming came to be dominated by "large-scale mechanized companies and farm co-ops" rather than family farms. The war "accelerated" this trend because "wealthy institutions were better able… to pay for expensive new machinery" (Norton 524 and 525).
This report gives the brief overview of the concept of corporate governance, its evolution and its significance in the corporate sector. The report highlights various key issues and concerns that are faced by the organizations while effectively implementing and promoting Corporate Governance.
...inues to grow not only because of the poor corporate governance styles but also due to the concerned authorities’ reluctance to solve the crisis. The elite families have created strong networks with influential personalities from across the world. This form of modern slavery means the underprivileged families cannot compete favorably with the elite families for the limited economic and social opportunities. Like the proletariat of the 19th century, the modern low-income American families lack capital, land and adequate entrepreneurial skills to start their businesses. As a result, most of these bottom 25% of the income distribution are always willing to accept the low paying jobs. Whereas the chief executive officers, managing directors and major shareholders create policies that allow them to gain lucrative compensation packages, dividends and other profit shares.
Bibliography: Turnbull, S. (1997). Corporate governance: its scope, concerns and theories. Corporate Governance: An International Review, 5 (4), pp. 180--205.
The end of 2001 and the start of 2002 saw the end of a period of magnified share prices and booming businesses. All speculations of misrepresentation came to light and those firms which once seem unconquerable were now filing for bankruptcy. Within this essay, I shall discuss the corporate governance mechanisms and failures which led to the Enron scandal resulting in global corporate governance reforms being encouraged.
Securities Commission Malaysia. (2014). General Section: Audit Oversight Board. Retrieved March 26, 2014, from Securities Commission Malaysia: http://www.sc.com.my/general_section/audit-oversight-board/
Nottingham Trent University. (2013). Lecture 1 - An Introduction to Corporate Governance. Available: https://now.ntu.ac.uk/d2l/le/content/248250/viewContent/1053845/View. Last accessed 16th Dec 2013.
The office of the Director of Corporate Enforcement (ODCE, 2015), Ireland defines Corporate Governance as “the system, principles and process by which organisations are directed and controlled. The principles underlying corporate governance are based on conducting the business with integrity and fairness, being transparent with regard to all transactions, making all the necessary disclosures and decisions and complying with all the laws of the land”. It is the system for protecting and advancing the shareholder’s interest by setting strategic direction for the firm and achieving them by electing and monitoring the capable management (Solomon, 2010). It is the process of protecting the stakes of various parties that have their interest attached with a company (Fernando, 2009). Corporate governance is the procedure through which the management of the company is achieving the goals of various stake holders (Becht, Macro, Patrick and Alisa,
Governance is the responsibility of boards of Directors. Appropriate governance code is though appointment of board and auditors by shareholders. Board’s responsibility is to set company’s strategic aims, provide leadership to put them into effect, management supervision and report to shareholders on stewardship.