...understand the importance of having an effective investor protection framework in the banking industry, we must first examine what are the key characteristics of an effective investor program in the banking industry. Without proper legal frameworks and strong regulations in place, investors will be faced with higher losses due to fraud. Various academic theories surrounding corporate governance will be explored (agency; stewardship and stakeholder) in examining the investor protection framework within the banking industry. Peter Gourevitch argues that various differing corporate governance models exists globally as a result of differing political climates which shape the rules and regulations that make up a country’s corporate governance model. Erik Berglof and Stijn Claessens argue that enforcement is the key to good corporate governance. However, enforcement is a result of a country’s political system which ultimately decides on the framework for regulation and enforcement. Peter Mulbert discusses corporate governance of banks in a principal-agent framework and that the corporate governance of a bank differs from those of a regular firm. This is contrasted with T.G. Arun and J.D. Turner’s discussion of corporate governance of banks in developing economies. Rafael La Porta et al. in their paper “Investor protection and corporate governance” argue that “that the legal approach is a more fruitful way to understand corporate governance and its reform than the conventional distinction...
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...Question1 What is corporate governance? Corporate governance refers to the framework of rules, set of systems, relationships, principles and processes by which a company is governed. (Corporate Governance Principles and Recommendations, 2014) Corporate governance is based on principles such as conducting the business with all integrity and fairness, being transparent with regard to all transactions, making all the necessary disclosures and decisions, complying with all the laws of the land, accountability and responsibility towards the stakeholders and commitment to conducting business in an ethical manner. Good corporate governance provide the confidence to investor, which is crucial to the ability of entities listed on the ASX to compete for capital. (Corporate Governance Principles and Recommendations, 2014) How important is it to investors in evaluating which corporations to invest in? There is a level of confidence that is associated with a company that is known to have good corporate governance, which is crucial to the ability of entities listed on the ASX to compete for capital. (Corporate Governance Principles and Recommendations, 2014) Corporate governance is known to be one of the criteria that foreign institutional investors are increasingly depending on when deciding on which companies to invest in. They provide the guidelines as to how the company can be directed or controlled such that it can fulfil its goals and objectives in a manner that adds to the value...
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...Corporate Governance What is Corporate Governance? Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation is directed, administered or controlled. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed. The principal stakeholders are the shareholders, management, and the board of directors. Other stakeholders include labor(employees), customers, creditors (e.g., banks, bond holders), suppliers, regulators, and the community at large. Objectives & Principles : Corporate governance is a major concern in the Asia and Pacific region, especially in the aftermath of the 1997 Asian financial crisis. The size and frequency of recent corporate governance debacles show that poor governance is not only a formidable hurdle to surmount but is also at the forefront of economic development issues. Ten core principles have been listed by Asian Development Bank (ADB). An attempt has been made to model the principles in a manner consistent with global best practice. Principle 1: Performance Orientation The principal objective of business enterprises is to enhance economic value for all shareholders by making the most efficient use of resources. A company that meets this shareholder value creation objective will have greater internally generated resources, improving its prospects for meeting its environmental, community, and social...
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...An Improved Pedagogy of Corporate Finance: a Constrained Shareholder Wealth Maximization Goal by Michael R. Santos , Gina Vega , John T. Barkoulas INTRODUCTION Bloom's taxonomy (1956) has guided pedagogical structure and innovation for half a century in the United States, and its focus on developmental learning remains relevant and instructive for us. The six developmental levels (knowledge, understanding, application, analysis, synthesis, and evaluation) separate basic knowledge acquisition from the critical thinking and analytical skills necessary for making ethical decisions or judgments. Answering questions about business ethics requires knowledge from multiple disciplines, including philosophy, psychology, political science, sociology, economics, finance, organizational management, and law. Analyzing such a vast body of data in ethical frameworks requires the highest levels (analysis, synthesis, and evaluation) of critical thinking as expressed in the taxonomy. Corporate governance, an interdisciplinary subject addressed in all these disciplines, explores the inter- workings of both for-profit firms and not-forprofit firms and is an area requiring business students to evaluate ethical issues when making decisions. Despite the broad responsibility of teaching corporate governance in the finance classroom, the pedagogy of finance has been restricted to ideas derived primarily from economics, statistics, and finance. Competing ideas from other disciplines are generally...
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...Capital markets help channelise surplus funds from savers to institutions which then invest them into productive use. Generally, this market trades mostly in long-term securities. The capital market efficiency is usually determined by how well the regulatory measures are defined since for there to be a proper functioning capital markets there has to be factors such as integrity and transparency as well as accountability. The law has been known to be the best institution to provide a mechanism that ensures the factors are well enhanced as well as promoted. Why the law matters The significance of protecting the proper functioning of markets has long been recognized and the law is deemed to be a proper tool to achieve this. The importance of protection of protecting the markets as opposed to the individuals within it has also been recognized and legislative intervention is justified. It is important to highlight the extent to which the law has been considered to be of great importance in many jurisdictions in that capital markets are regulated at two levels, namely; Self-regulation by self-regulatory organizations e.g. Nairobi Stock Exchange, LST, NYSE, ASKB, ICPAK etc. as well as direct regulation otherwise referred to as public regulation by the state bodies e.g. The Capital Markets Authority, FSE UK, Financial Exchange Commission etc. In most cases regulation has...
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...Review Volume 15 Issue 1 Special Issue: Comparative Corporate Governance 7-1-2003 Article 13 Corporate Governance in Malaysia Kamini Singam Recommended Citation Singam, Kamini (2003) "Corporate Governance in Malaysia," Bond Law Review: Vol. 15: Iss. 1, Article 13. Available at: http://epublications.bond.edu.au/blr/vol15/iss1/13 This Article is brought to you by the Faculty of Law at ePublications@bond. It has been accepted for inclusion in Bond Law Review by an authorized administrator of ePublications@bond. For more information, please contact Bond University's Repository Coordinator. Corporate Governance in Malaysia Abstract This article examines the corporate governance system in Malaysia. A sound corporate governance system should help create an environment conducive to the efficient and sustainable growth in the Malaysian corporate sector. Since the Southeast Asian financial crisis in 1997 – 98 (‘financial crisis’), corporate governance has become a key policy issue confronting many Southeast Asian countries, including Malaysia. This article considers the distinctive problems of corporate governance in Malaysia, despite several steps for reform that have taken place since the financial crisis. There will be a brief discussion on the meaning of corporate governance and an overview of the present status of corporate governance in Malaysia, in particular after the financial crisis. Keywords corporate governance, Malaysia, Southeast Asian financial crisis ...
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...CORPORATE GOVERNANCE IN TURBULENT TIMES ABSTRACT The last few years we have seen some major scams and corporate collapse across the globe. In India, the major example is Satyam which is one of the largest IT companies in India. All these events have made stake holders realize the urgency and importance of good corporate governance. Before investing money in any company people are quite concerned how companies are being managed. International organizations like IMF, WTO and World Bank are also insisting on transparency. All this has made Corporate Governance and transparency up the public agenda. Good Corporate Governance makes for good business sense. It increases confidence of shareholders in the company. This leads to better stock prices. Good disclosure practices lead to a more liquid market for the company. This lowers cost of debt for the company. Thus the CEOs of today, there is a clear business case for complying with principle of good Corporate Governance. In the era of Globalization & Liberalization market forces plays a crucial role. We know that liberalization in emerging economy has made access to foreign funds easier. Availability of foreign funds will lower the cost of capital. It is quite understood. All companies will like this to happen, but the international lenders will be careful. They will expect that the companies they lend to follow good Corporate Governance. These lenders will demand...
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...significant shift from command-plan economy in which market mechanism are replaced by a centralized state authority into a market economy with socialist orientation through launching a political and economic reform so-called “renovation campaign” which is often understood by foreign scholars. This reform aimed to liberalize the economy as well as encourage the potential for the development of national economy such as the private economic sectors and foreign investment including foreign-owned enterprises. To boost economic development, the Enterprises Law 1999 (the National Assembly, 1999) was enacted, though it only dealt with domestic investors, being the first real step towards corporate governance and creating a legal framework for an efficient regime of corporate governance. It also can be argued that the history of corporate governance in Vietnam started with the formation of the stock market, as just one year after issuing the Enterprises Law 1999, the establishment of the stock market was marked by the official operation of Ho Chi Minh City Securities Trading Centre in 2000. However, from...
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...3, No. 1, January, 2009 SOX and its effects on IT Security Governance Rosslin John Robles1, Min-kyu Choi1, Sung-Eon Cho2, Yang-seon Lee2, Tai-hoon Kim 1 School of Multimedia, Hannam University, Daejeon, Korea 2 Dept of Information Communication, Sunchon Univerity, Sunchon, Korea 3 Fumate Inc., Daejeon, Korea rosslin_john@yahoo.com, secho@sunchon.ac.kr, yslee@fumate.com, taihoonn@empal.com Abstract The Sarbanes-Oxley (SOX) Act is a United States federal law enacted on July 30, 2002 in response to a number of major corporate and accounting scandals including those affecting Enron, Tyco International, Adelphia, Peregrine Systems and WorldCom. This paper discusses the effects of Sarbanes-Oxley (SOX) Act on corporate information security governance practices. The resultant regulatory intervention forces a company to revisit its internal control structures and asses the nature and scope of its compliance with the law. This paper reviews the implications emerging from the mandatory compliance with Sarbanes-Oxley (SOX) Act. Issues related to IT governance and the general integrity of the enterprise are also identified and discussed. Industry internal control assessment frameworks, such as COSO and COBIT, are reviewed and their usefulness in ensuring compliance evaluated. 1. Introduction Accounting scandals at some of the big corporations like Enron, HealthSouth, Tyco and WorldCom had a devastating impact on investor confidence. Clearly, it was possible to engage in frauds of such...
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...How is good corporate governance achieved? 3 2.2 Why is this concept important to Australia? 4 2.3 What are the roles, responsibilities and powers of the Board of Directors, Management and shareholders? 5 2.3.1 The roles, responsibilities and powers of the Board of Directors 5 2.3.2 The roles, responsibilities and powers of the Board of Management 7 2.3.3 The roles, responsibilities and powers of the Board of Shareholder 8 2.4 How does the Board add value to a company? 9 2.5 What are at least two of the theories that are used to “measure” corporate governance? How do they measure “good” corporate governance? e.g. Contractual theory and the communitarian theory, stakeholder theory. 10 2.6 What disclosures to shareholders are required by law and why? 11 3 Conclusions 13 4 Bibliographies 14 1 Introduction Nowadays, the company governs has become the global economic which a subject matter grows day by day. When a company maintains the competitive power, attracting investments, guaranteed that sustainable, and struggle against corruption, it must to applying good governance. In the most foundation's level, the company governs sets up “the game rule” to handle the related property rights and the domination separation. Board of directors’ benefit, the coordinated enterprise's owners, the superintendent and other benefit counterparts, were considered that is the essential effective revolution company governs the frame in a company. The good corporate management...
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...EL Galaly Prepared by: Sayed Fahmy EL-Sayed Class No : 49-3rd A A cyclical view of the relationship between corporate Governance and strategic management Introduction The function of corporate governance is generally performed by the boards of directors within the firms. The boards always have power to hire and fire top managers and to ratify and monitor important decisions. In addition, they can influence strategic decisions by aligning interests of shareholders and top managers through executive compensation Researches has found that corporate governance mechanisms such as the boards of directors and executive compensation affect strategic decisions that benefit themselves at the expenses of shareholders when there is lack of effective corporate governance. As show in the figure it is a new proposal of a cyclical model in the relation between corporate governance and strategic decision, highlighting that strategic decisions can also affect corporate governance through shaping firm ownership structure. Discussing the impacts of strategic decisions on firm ownership structure and corporate governance. Suggesting that the relationship between strategic management and corporate governance is a cyclical and ownership structure plays a central role in understanding how strategic management affects corporate governance. Literature review (Summary) Corporate governance results from the separation of decision making and risk-bearing functions at modern corporations to ensure that...
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...The Japanese corporate governance system differs vastly from the US system. Discuss corporate governance issues that may arise under the Japanese Keiretsu system from the perspective of a).financiers, b). Owners, c). Suppliers, d). Employees. Corporate Governance System in Japan (1) Definition of Corporate Governance Corporate governance deals with the agency problem: the separation of management and finance. This basic agency problem suggests a possible definition of corporate governance as addressing both an adverse selection and a moral hazard problem. The traditional definition of corporate governance was such a narrow view as Shleifer and Vishny (1997) mentioned that the ways in which the suppliers of finance to corporations assure themselves of getting a return on their investment. Recent trend, however, express doubts on the definition that solely focuses on shareholder value. EPA (1998) shows the constituents of corporate governance as follows: Table 1: Constituents of corporate governance Stakeholders | Interest | Desired Management | Shareholders | Maximize profitsAsset protection | Profitable managementSound management | Investors | Efficient investment | Exploitation of profitable investment | Creditors | Protection of receivables | Sound management | Main bank | Corporate growth | Sound managementPursuit of productivity growth | Employees | Pay raiseSecure employment RelationshipPromotion | Profitable managementSound managementSustainable...
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...Scope of corporate governance: | Corporate governance is "the system by which companies are directed and controlled". It involves regulatory and market mechanisms, and the roles and relationships between a company’s management, its board, its shareholders and other stakeholders, and the goals for which the corporation is governed. In contemporary business corporations, the main external stakeholder groups are shareholders, debt holders, trade creditors, suppliers, customers and communities affected by the corporation's activities. Internal stakeholders are the board of directors, executives, and other employees. Corporate Governance has a broad scope. It includes both social and institutional aspects. Corporate Governance encourages a trustworthy, moral, as well as ethical environment. Scope of Corporate Governance can be shown in the following picture for at a glance realization: The rights and obligations of shareholders A corporate governance framework should protect shareholder rights. It should ensure that there is one vote for one share. It should ensure that management provides sufficient and relevant information. It should encourage shareholders to participate in annual general meetings and vote. Shareholders should be able to share in residual profit (dividends). Minority shareholders should be protected. It should ensure fairness and transparency in the operations of the company. Obligations: use voting rights. Equitable treatment of shareholders ...
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... Business Foundations BIB 1A CORPORATE GOVERNANCE “What is Corporate Governance? Why is it important for Business?” The business environment is formed of complex interrelationships among and between companies of the same industry. With the process of globalization taking place in the business community, in different countries, all around the world, good ethical practices have become almost crucial to every business transaction, and work on effectively operating in the global market. Therefore, in order to gain credibility and a good position in the international field, values such as trust, responsibility and integrity are important between transacting business corporations. Thus, laws and policies that protect the interests of companies and corporations have been put into effect due to a “standardization of the code of ethics” in the corporate world. This has led to the creation of a better attitude among business establishments, accredited on the corporate governance applied within the company. The main goal of this paper is to explain what corporate governance is, to develop its principles, mechanisms and controls, and its efficiency in the world of business. The OECD Principles of Corporate Governance states: "Corporate governance involves a set of relationships between a company’s management, its board, its shareholders and other stakeholders. Corporate governance also provides the structure through which the objectives of...
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...Student ID: 082168461 The impact of the Sarbanes-Oxley Act on Corporate Governance and US Companies An examination to determine the impact of the Sarbanes Oxley Act, the costs and benefits of its implementation and how it has affected Corporate Governance and US Companies. Table Of Contents 1. Abstract...................................................................................................................... 4 1.1 Introduction ................................................................................................. 4 1.2 Methodology................................................................................................ 4 1.3. Limitations .................................................................................................. 5 1.4 Analysis and conclusion .............................................................................. 5 1.5 Further research ........................................................................................... 6 2. Literature Review: An Overview of Corporate Governance ..................................... 6 2.1 United Kingdom ........................................................................................ 14 2.2 Self-regulation prior to SOX ..................................................................... 18 3. Literature Review: The SOX Act ................................................................ 19 3.1 Enron, the trigger to SOX? ....................................
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