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Financial Accounting Study Corporate Governance

In: Business and Management

Submitted By TwT19z92
Words 2172
Pages 9
Introduction
Corporate governance could be defined as the system of regulating and overseeing corporate conduct and of balancing the interests of all internal stakeholders and other parties which are external stakeholders, governments and local communities who can be affected by the corporation's conduct, in order to ensure responsible behavior by corporation and to achieve the maximum level of efficiency and profitability for a corporation. (Jean, Anil and Mirko 2011, pp.10). Therefore, the corporate governance framework consists of explicit and implicit contracts between the company and the stakeholders for distribution of responsibilities, rights, and rewards; the procedures for reconciling the sometimes conflicting interests of stakeholders in accordance with their duties, privileges, and roles; and procedures for proper supervision, control, and information-flows to serve as a system of checks-and-balances. (businessdictionary.com 2012)
Starbucks Company and British Petroleum Plc are chosen to explain and discuss on good corporate governance; meanwhile Enron is chosen to explain and discuss on bad corporate governance. Since Starbucks and Enron are incorporated in the United States of America (USA), therefore these two companies will be used to compare how they governance their company under principle of corporate governance of America.

Corporate Governance in United States (US)
In United States, after have various corporate scandals, corporate governance has rising to the forefront of public attention such as Enron, WorldCom and Tyco shook the U.S. securities markets then set off a serious global financial crisis. It highlighted corporate governance failures, lack of adequate risk management procedures responsibility from the board. Sarbanes-Oxley Act of 2002 (SOX) strengthened rules of board independence and the role of committees in company. This act...

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