Supervision and Enforcement in Corporate Governance Governance is the process whereby people in power make decisions that create, destroy or maintain social system, structure and processes. Corporate governance is, therefore, the process whereby people in power direct, monitor and lead corporations, and thereby either create, modify or destroy the structure and system under which they operate. Needs for corporate governance • Separation of ownership from management-A company is run by its managers. Corporate governance ensures that managers work in the best interests of corporate owners (shareholders). • Global capital-In the globalised world of today, global capital flows in markets which are well –regulated and have high standards of efficiency and transparency. Good corporate governance gains credibility and trust of global market players. • Investor protection-Investors are educated and enlightened of their rights. They want their right to be protected by companies in which they have invested money. Corporate governance is an important tool for protecting investors’ interest by improving efficiency of corporate enterprises. . • Foreign investments-significant foreign institutional investment is taking place in India. These investors expect companies to adopt globally accepted practices of corporate governance and well developed capital markets. Demanding international standards of corporate governance and greater professionalism in management of Indian corporate substantiates the need for good corporate governance. • Financial reporting and accountability-Good corporate governance ensures sound transparent and credible financial reporting and accountability to investors and lenders so that funds can be raised from capital mark... ... middle of paper ... ...arterly, half yearly and yearly performance and operating results in newspapers. With the above examples and discussion, good corporate governance practices are tedious to implement .this is because they require buy in form people across the enterprises from the boardroom to the shop floor nor do these practices guarantee that business mishaps ,such as fraud will not occur. However the implementation of such practices does provide reasonable assurance that the interest of stakeholders will be protected by management on a proactive basis this is the true spirit of corporate governance. References- • Vasishth and Rajput, Dr.Neeru and Dr.Namita, 2010. Corporate Governance Values and Ethics. 1st ed. Delhi: Taxmann publications (p) Ltd. • Fernando, A.C, 2011. Corporate Governance: Principles, Polices and Practices. 2nd ed. Singapore: Pearson Education Singapore Pte Ltd.
The siphoning of funds can occur in the income statement and capital, based on the corporate governance policies, these two areas are important where financial fraud schemes can be present. Corporate governance include policies that are framed to secure the corporation goals. It include financial goals and shareholders interest also.
Shivdasani, A., & Zenner, M. (2004). Best practices in corporate governance: What two decades of research reveals. Journal of applied corporate finance, 16(2/3), 29-41.
Corporate Governance Bega Cheese Limited issues a Corporate Governance Statement that outlines the measures put into place to ensure organisational integrity and transparency of data in the financial statements that are published in the annual report. It would appear that Bega is exerting extreme effort to ensure that the risk of misstatements is minimised. In effect, is by assigning risk management and oversight responsibility to specific groups/personnel within the organisation using a systematic approach. The board is held accountable for assessing, approving and checking the Group’s risk management systems, assessment of the adequacy of the internal compliance, policies and procedures and control mechanisms. Furthermore, the board also approves and monitors major capital expenditure, budgets, financial and other reporting.
Corporate governance receives close scrutiny from private, institutional investors and competing firms. The structures and process associated with decision-making, controls, accountability, monitoring and production activities of organizational agents behaving in the best interest of shareholders and stakeholders, is the framework for corporate governance. The quality of the firm’s corporate governance affects multiple layers within operations, finance and value. The poorer quality of corporate governance firm carries will lead to depressed value and low efficiency. Looking at Colliers International Group Inc., the board of directors has established the committees dedicated to ensuring the execution of its’ corporate governance objectives.
In recent years the issue of corporate governance has become a keenly debated topic in international finance. In developed countries, some of the biggest corporate collapses in history have brought about a change in focus. No longer are governments and lawmakers trying to deregulate and reduce the controls and disclosure requirements of corporations. The deregulation boom has ended, as regulation comes back into the picture.
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.
According to the conceptual framework, the potential users of financial statements are investors, creditors, suppliers, employees, customers, governments and agencies, and the general public (Financial Accounting Standards Board, 2006). The primary users are investors, creditors, and those who advise them. It goes on to define the criteria that make up each potential user, as well as, the limitations of financial reporting. The FASB explicitly states that financial reporting is “but one source of information needed by those who make investment, credit, and similar resource allocation decisions. Users also need to consider pertinent information from other sources, and be aware of the characteristics and limitations of the information in them” (Financial Accounting Standards Board, 2006). With this in mind, it is still particularly difficult to determine whom the financials should be catered towards and what level of prudence is necessary for quality judgment.
The ethical and corporate governance theories related to agency theory, stakeholder theory, transaction and political theory are associated with the corporations. The corporations while operating in the market should follow theory on business ethics where the rights and wrongs are addressed by the courts along with the concern of the business corporations towards the society. 3. The corporations should place more emphasis on the issues related to corporate social responsibility where issues need to be addressed related to fairness, justice and equality. The following provisions should be made for the members of the corporations for ensuring prevalence of justice, equality and fairness.
Bibliography: Turnbull, S. (1997). Corporate governance: its scope, concerns and theories. Corporate Governance: An International Review, 5 (4), pp. 180--205.
The separation of ownership and control gives management powers to purse private benefits with the expense of shareholders, which increases agency costs and decreases economic efficiency. Corporate governance has been an important element for managing corporate operation and improving economic efficiency. John and state that corporate governance is effective control mechanism through which firm’s stakeholders could exercise control over corporate insiders and management to protect their interests. Firm’s stakeholders include shareholders and creditors, as well as other stakeholders like employees and
Corporate governance refers to the relationship between shareholders, management and the board of directors of a corporation and how each of these participants influence the direction and performance of the corporation. The governance of a corporation directly relates to how that company will operate and whether that company will be successful. Corporations that operate using sound, moral corporate governance lay the groundwork for a corporation that has integrity and efficiency in financial markets. When a corporation is being governed by sound practices it leads to better financial decisions. When corporations prosper, it leads to an economy that can grow and provide the United States citizens with a better quality of life as well as
As far as the Asian countries concern regarding the corporate governance issues, they started to enforce their own Code of Corporate Governance to avoid any financial crisis in the future. Among the countries that established the Code of Corporate Governance after the financial crisis were Malaysia and Singapore, which in the year 2000 and 2001 respectively (OECD, 2014). In contrast, Hong Kong has become the first Asian country that produced the Code of Best Practice, which was officially released in 1993 (ACGA, 2012). By having the Code before 1997 Asian financial crisis, Hong Kong became a top-ranked country with strong corporate governance practice in early 2000s. However, as the development of corporate governance practices were actively took place in Asia, Singapore replaces Hong Kong at the top in 2010 while Malaysia shows good performance in improving its corporate governance practices (Lees, 2010). The improvement of corporate governance among these three countries can be seen by the revision of their ‘Code’. Hong Kong Stock Exchange revised the Corporate Governance Code in 2004, followed by Singapore in 2005 and Malaysia in 2007 (OECD, 2014). In 2012, these three countries faced t...
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.
K, . N., ER, w., DAVID, K., PAUL, M., WALTER, O., & EVANS, A. (2012). Corporate governance theories and their application to boards of directors: A critical literature review . Prime Journal of Business Administration and Management (BAM), 2(12)(2251-1261), 782-787.
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,