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The seed for modern corporate governance was sown almost 40 years ago when “Watergate” scandal that resulted into the resignation of then America’s president Richard Nixon. But it only after the infamous collapse of Maxwell Corporation PLC, Polly Peck, WorldCom and other big corporations that propelled corporate governance into the limelight. The Cadbury report, formally entitled ‘ The Report of the Committee on the Financial Aspects of Corporate Governance was published in 1993’ to address the frequent occurrence of financial scandals in the 1980s, which led to a fall in investor confidence in the quality of company’s financial reporting. In this paper, the effectiveness of corporate governance will be based on review of empirical studies on this issue.
Following the publication of the Cadbury Report, the London Stock Exchange made it compulsory for companies listed in UK to ‘state in the report and accounts whether they comply with the Code and identify and give reasons for any area of non-compliance’, also known as the compliance report, as a continuing obligation of listing. The Greenbury, and the Higgs Report was later published and consolidate with Cadbury Report to formed the Combined Code. U.S enacted the Sarbanes-Oxley Act (SOX) in 2003 after major corporate and accounting scandals which affected Enron, WorldCom and a host of other companies.
Over the span of twenty years, the combined code was updated by incorporating various reports published by FRC, and was renamed to the ‘UK Corporate Governance Code’ in 2010. Key areas such as the independence of Non-executive directors was further defined in the Combined Code (2006), and the introduction of the remuneration committee consisting of non-execu...

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...heir company’s internal control and financial statements.
Research Approach Outline
The paper aims to provide insight about how a regulatory approach in UK, as compared to the legislation approach in US, would affect the effectiveness of the corporate governance. This analysis will be based solely on published and readily available data.
• Collect data about percentage of non-compliance from UK and US for the last 10 years.
• Collect data about major corporate failures within the last 10 years.
• To identify the possible relationship between the corporate failure and corporate governance system
• Analyze obtained information to come to the conclusion about the effectiveness of corporate governance in the 2 countries.
• Analyze and compare the strengths and weaknesses of the 2 different approaches.
• Recommendation about how the corporate governance can be improved.

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