StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Corporate Governance - Research Paper Example

Cite this document
Summary
The study would focus on the corporate governance as a terminology that refers to the processes, rules and laws that through which businesses are controlled, operated and regulated. It can refer to factors determined internally by officers, stakeholders or a corporation. …
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER95% of users find it useful
Corporate Governance
Read Text Preview

Extract of sample "Corporate Governance"

Corporate Governance Generally, corporate governance is a terminology that refers to the processes, rules and laws that through which businesses are controlled, operated and regulated (Clarke 12). It can refer to factors determined internally by officers, stakeholders or a corporation. It as well can refer to external factors like clients, consumer groups or government groups. When corporate governance is well enforced and well defined, it provides a structure that works well to benefit everyone concerned. To achieve this, the rule of corporate governance works to ensure that the accepted ethical standards are adhered to, and the best practices are maintained. Due to the high rate of alleged crimes by corporate officers, through abuse of power and high profile scandals, corporate governance has received attention in the recent years. Corporate governance can also be seen as the way in which companies are controlled and governed. It also entails relationships among stakeholders with the same goals to benefit the welfare (Clarke 18). Corporate governance has several good components that ensure proper governance. To begin with, directors and senior officers take up the task of implementing new requirements that have been imposed by the Sarbanes- Oxley Act and associated SEC and stock market regulations. They need tostay in focus with the broader and strategic objectives of corporate governance (Shakespeare 333). Businesses will grow stronger if they comply with legal and regulatory requirements. They should also maintain high profile risk management. The boards of directors are primarily responsible for ensuring there is effective governance. They not only have to ensure that sound systems of governance are in place, but also that such systems work effectively through evaluation of performance and thorough monitoring (Julien & Rieger 4). On the side of legal and regulatory reforms, a lot of attention has been particularly, focused on boards and their performance especially when it comes to the independence of the board management. There also has to be a lot of scrutiny on the side of directors, they should be watched more closely to ensure there is a high level of transparency. Good corporate governance in a business will always translate to good financial performance. Profitable investment opportunities and increased reliance on external financing are attributes exhibited by firms with strong corporate governance, according to the University of Michigan Business School. Also, it is true that companies with high governance standards will always receive the best premium from investors. Good corporate governance defines the business strategy of a business, enhancing competitive positions. A company can therefore recruit and retain productive employees if it possesses a stable base of corporate governance (Julien & Rieger 8) Enron failed greatly in corporate governance. From violating the recommendations by government reformers where Ken Lay served as CEO and chairman of the board, to having significant shares of Enron being owned by board members, and also the board members earning money working on Enron’s projects. Enron also suffered complicated accounting and finance transactions needed approval by an external auditor and lawyers even before getting to the board members. There was a major problem with Enron’s code of ethics, as senior stakeholders were prohibited from having any financial stake in organizations dealing with Enron. Corporate Governance has played a major role in the auditor’s evaluation of a company’s financial systems and internal control systems. Corporate governance ensure that that board members act transparently and maintain accountability in their actions, this greatly assists the auditors in ensuring that there is no fraud committed by the board members thus reducing the overall task of auditing. Corporate governance also ensures that the senior members of the companies including the directors and managers are scrutinized, and thoroughly checked for fraud. With corporate governance, auditors are satisfied that, good controls are in place for ensuring compliance with laws, supervisory requirements and relevant internal policies (KPMG 3). To ensure that auditors have a smooth sailing, the corporate governance is charged with the responsibility of ensuring the internal audit department, enjoys all the benefit enjoyed by other stakeholders. Corporate governance ensures that there is effective monitoring and reviewing of the internal audit function (KPMG 1). Since the institution of the Sarbanes-Oxley Act in 2002, the corporate governance has introduced some governance policies that are essential to both stakeholders and auditors. These policies are in regard to the legal compliance of the directors and senior managers, and their transparency. This also ensures that there is freedom for the stakeholders to confront the board members in case of a problem. Good corporate governance has also worked to ensure that there is financial growth. Any company with a good set of rules, is guaranteed to have desirable financial outcome. Corporate governance has ensured there is clear accountability and delegation. This has greatly eased up the work for auditors. There has also been the introduction of a risk management system. With the introduction of the risk management, early warning to upcoming events will be sent thus allowing the company to turn some of those risks to opportunities and avoid some of the risks that can be avoided. In the event of a tragedy, at least the company prepares for it (NSW 3). Corporate governance ensures there is a well-defined committee responsible for directing and controlling the company’s activities. Finally yet importantly, a good code of conduct is established and maintained in the company. This should be available and followed by all staff members. This code of conduct should be reviewed as often as possible and proper documentation made too (NWS 5). Personal Opinions Corporate governance will play a great role in the prevention of future scandals at the organizational level. With proper auditing and accountability in place, little chance will be left for fraudsters to engage in scandalous deals. This is especially so considering the current effects of the Sarbanes-Oxley Act in regard to organizational management. The application of strict corporate governance policies will ensure that corruption is reduced within the organization as the internal auditors will be better placed to carry out their duties without fear. However, it must be noted that corporate governance alone may not fight all kinds of scandals that may occur in an organization. In this respect, other specific control measures should be employed so as to seal any loophole that may exist in an organization. Conclusion In conclusion, inception of corporate governance has played a major role in the reduction of corporate scandals. This has been made possible by the introduction of code of conduct which has ensured discipline among the staff members. The introduction of a select committee ensures the existence of law and order in the organization. This in turn will avoid unnecessary arguments and scandals within the company. The inception of clear accountability and delegation ensures that all staff know what to do and do it well. This avoids conflicts between staff members. Works Cited Clarke, Thomas. "Theories of Corporate Governance: The Philosophical Foundations of Corporate Governance". London and New York: Routledge. 2004. Print. Julien, Rick & Rieger, Larry. Seven components of good corporate governance. High Beam Business. July 1, 2003. Viewed 27 January, 2012 https://secure.easy-forex.com/int/en/tctechnicalanalysis.aspx KPMG. Internal audit’s role in modern corporate governance. Thought Leadership Series. Viewed 27 January, 2012 http://aci.kpmg.com.hk/docs/AC/Internal_audit_role.pdf Lagace M. Enron's Lessons for Managers. Harvard Business School. July 12, 2004. Viewed 27 January, 2012 http://hbswk.hbs.edu/item/4253.html NWS. Corporate Governance Strategic Warning System. 2011. Viewed 27 January, 2012 http://www.audit.nsw.gov.au/ArticleDocuments/191/05_Vol_2_2011_Corp_Governance.pdf.aspx?Embed=Y Shakespeare, Catharine (2008). "Sarbanes–Oxley Act of 2002 Five Years On: What Have We Learned?". Journal of Business & Technology Law: 333. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Corporate Governance Research Paper Example | Topics and Well Written Essays - 1000 words”, n.d.)
Retrieved from https://studentshare.org/business/1394798-corporate-governance
(Corporate Governance Research Paper Example | Topics and Well Written Essays - 1000 Words)
https://studentshare.org/business/1394798-corporate-governance.
“Corporate Governance Research Paper Example | Topics and Well Written Essays - 1000 Words”, n.d. https://studentshare.org/business/1394798-corporate-governance.
  • Cited: 1 times

CHECK THESE SAMPLES OF Corporate Governance

UK Corporate Governance Code

However, the present Combined Code on Corporate Governance has been more of a reaction to worldwide business scandals rather than being a pro-active measure that ensures business legitimacy (Porter, 2009).... It started with the formation of the Corporate Governance Code in the early 1990s.... UK Corporate Governance Code Since the 1970s, there has been an increased amount of focus on Corporate Governance.... The "comply or explain" principle which is one of the main features of the Code has its roots in the Cadbury Committee or the Committee on the Financial Aspects of Corporate Governance report of 1992....
7 Pages (1750 words) Essay

International Corporate Governance

International Corporate Governance: Different Principles, One Goal Name Name of Professor Word Count (excluding footnotes and reference page): 3, 450 Introduction Corporate Governance is defined as the mechanism by which organisations are governed and regulated.... This essay will discuss and compare the Corporate Governance system in the UK with the systems of the United States, China, and OECD countries, particularly Canada, in order to substantiate the argument that “regardless of what form of regulation, principles or prescription, the main aim of Corporate Governance should be th… e maximisation of shareholder value....
18 Pages (4500 words) Coursework

Finance - Corporate Governance

Corporate Governance Table of Contents Table of Contents 2 Introduction 4 1.... mportance of Corporate Governance 5 3.... onclusion 11 References 13 Introduction Corporate Governance is a central issue for most of the companies operating in today's globalised economy.... Corporate Governance primary is involved with answering the following questions: How the investors of a company manage to get returns on their invested amount from the managers of the company?...
10 Pages (2500 words) Essay

Ethics in Corporate Governance

Ethics in Corporate Governance Introduction Major objective of Corporate Governance is to maintain a balance between social and economic goals.... Moreover, effective Corporate Governance maintains an effective balance between communal and individual goals.... hellip; According to Sir Adrian Cadbury (2002), “The aim of Corporate Governance is to align as nearly as possible the interests of individuals, corporations and society” (Cadbury, 2002)....
3 Pages (750 words) Essay

Does Corporate Governance Work

Corporate Governance is authority exercised with outmost honesty and integrity to manage the affairs of company through a set of processes and rules (Clarke and Dean, 2005).... (2005) also define Corporate Governance as constituting functions and processes that oversee and influence the actions of a firm's management.... Therefore, Corporate Governance refers to the Karamanou and Vafeas (2005) narrow the definition of Corporate Governance to the task of monitoring the performance of an employee....
16 Pages (4000 words) Essay

Corporate Governance and Accountability

The case study "Corporate Governance and Accountability" states that Davis (2006) cites the definition of Corporate Governance provided by the Cadbury Committee Report of December 1992 stating that Corporate Governance is the 'system by which companies are directed and controlled.... Another definition is cited from the Higgs Report stating that 'Corporate Governance provides the structures.... Corporate Governance refers to the structure which ensures that the right questions are asked and checks and balances are in place to make sure that the answers to these questions reflect what is in the best interest of the organization for the long-term sustainability of value (Minow & Monks, 2008)....
8 Pages (2000 words) Case Study

Corporate Governance

According to Hitt, Ireland & Hoskisson,… In the course of deciding on capital structure and the cost of capital, the implications of the rating agencies need to be assessed as they have Corporate Governance Apart from the three internal governance mechanisms- ownership concentration, boards of directors,and executive compensation- the capital structure would help support the welfare of managerial agents with those of the owners of the firm.... based firms could integrate elements of the Corporate Governance practices to make better decisions by coming up with policies that will help their firms gain public trust....
1 Pages (250 words) Case Study

Management School: Corporate Governance

This essay declares that many Corporate Governance scandals have arisen because of a few individuals abusing their position within an organization.... The falling of these firms and companies have led to assessing of the UK Corporate Governance Code to the current 2014 version.... hellip; As the report highlights that the re-evaluation has helped stringently raising the bar of Corporate Governance in the country.... As the report stresses that the current model or version of the UK Corporate Governance Code outlines nearly 19 excellent practice and principles and entailed provisions for the Corporate Governance....
8 Pages (2000 words) Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us