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Review of Cadbury

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A REVIEW ON CADBURY REPORT
Prepared By: JST 2014

Introduction
• The Cadbury report was once referred to as The Report of The Committee on the Financial Aspects of Corporate Governance. The report was published in December 1992, following the recommendations of the Cadbury Committee. • Address concerns about the working of the corporate governance system. • The Committee made it its purpose to address the financial aspects of corporate governance and out of this produced a Code of Best Practice.

The Committee
• The Cadbury Committee was established in May 1991 by the Financial Reporting Council, the London Stock Exchange, and the accountancy profession. • Reasons:  Increasing lack of investor confidence in the honesty and accountability of listed companies.  Financial collapses of listed corporations.  Auditors who signed off a set accounts which turned out be a misrepresentation of the facts, and about losing its self-regulatory role.  Lack of board accountability for such matters as directors’ pay.

Corporate Governance


Contemporary corporate governance started in 1992 with the Cadbury report in the UK Cadbury was the result of several high profile company collapses is concerned primarily with protecting weak and widely dispersed shareholders against self-interested Directors and managers





Cadbury Report 1992
 

The committee on the financial aspects of corporate governance’ The Code of Best Practice’ (1992)
 Voluntary code ▪ But for listed companies a compliance statement was required
▪ ‘Comply or explain’ – Principles rather than rules  The ‘principles v rules’ argument (UK v USA)  The following example is a true case, but in a non-financial setting (from China Daily, December 2007)

Corporate Governance Parties


Shareholders – those that own the company Directors – Guardians of the Company’s assets for the

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