...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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...Corporate Governance refers to the way an organization is directed, administrated or controlled. It includes the set of rules and regulations that affect the manager’s decision and contribute to the way company is perceived by the current and potential stakeholders. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation such as; boards, managers, shareholders and other stakeholders and spells out the rules and procedures and also decision making assistance on corporate affairs. By doing this, italso provides the structure through which the company’s objectives are set and the means of obtaining those objectives and monitoring performance. Corporate governance may be the ways of bringing the interests of investors and managers into line and ensuring that firms are run for the benefit of investors. Given the state of the economy of Pakistan in 2010, troubled as it is; ideally it would be more desirable to look at the governance issues at macro level for Pakistan. As a famous economist, Dr Shahid Javaid Burki- a long observer of Pakistan’s economy has recently stated “Pakistan can generate a greater bounce in its economy than India by creating better governance. It has occurred before in the country’s difficult economic history and could happen again.” (Improved Governance: Dawn, 12th, October 2010). However, as a starting point , in this paper we look at closely the governanceissues for the...
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...of Concern for both, the investors, and the corporate governance. Company’s good corporate structure can have a positive impact On investors. Our study, with the support of previous studies, tries to prove that the investors are also concerned about the adverse Section and agency problems. This study lacks evidences from the previous researchers regarding the relationship between investor’s reaction and adverse selection and agency problems. Even then it is a good attempt to study the behavior of investors towards investing in the company where the problems of adverse selection and agency problems are present. Key Words: Investors Reaction, Adverse Selection, Agency Problems, Corporate Governance Introduction: This paper describes the reactions of the investors to the corporate governance issues with an emphasis on the situation of agency problems and adverse selection. This paper adds to the existing literature of how investor reacts to different corporate governance issues. The idea is that how adverse selection and agency problems can directly or indirectly affect the investors thinking. Corporate governance has an influence on the investor’s reaction .Many corporate governance issues like board size, outside directors, CEO tenure and other such issues have the impact on investor’s reaction. Investors can react differently to the situations. Agency problems and adverse selection problems can have a major impact on these situations. Normally agency problems...
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...Corporate Governance | Should accountability, transparency and effective risk management be regarded as the most important principles of Corporate Governance? | | What actually corporate governance is and how it actually affects a corporation? What are the main players playing a part in corporate governance? These are the questions one must understand in order to see the role of principles like accountability, transparency and effective risk management in corporate governance. So corporate governance is defined as “the relationship between a company’s shareholders, directors, and management as defined by the corporate charter, bylaws, formal policy, and rule of law”. (Gallegos, 2004, p. 37). This definition clearly shows the relationship of a company’s shareholder, directors and management. But this definition is only limited to what are the main players of corporate governance. In order to understand its impact on a corporation or company, ASX defines it as, “Corporate governance is the system by which companies are directed and managed. It influences how the objectives of the company are set and achieved, how risk is monitored and assessed, and how performance is optimized. Good corporate governance structures encourage companies to create value (through entrepreneurism, innovation, development and exploration) and provide accountability and control systems commensurate with the risks involved’. (ASX Principles of Good Corporate Governance and Best Practices...
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...A STUDY OF EFFECT OF CORPORATE GOVERNANCE PRACTICES AND BOARD COMPOSITION ON DIVIDEND PAYOUT POLICIES ON NIFTY 50 COMPANIES (2000-2012) | RESEARCH PROPOSAL, BUSINESS RESEARCH METHODS | | 2/27/2013 2/27/2013 Abstract Purpose: The purpose of this study is to examine the relationship between Corporate Governance practices and corporate dividend policy in India. Design/methodology/approach: Data regarding ownership structure, dividend policies and board composition would be collected for 40 non-financial companies listed on National Stock Exchange in India. The period of investigation has been taken from 2000-2012. Regression models would be run to define the relationship and for estimation purpose. Potential Findings: Based on the some heuristics and back of mind observations it can be seen that board size and composition, extent of ownership of promoters, the amount of free float in the market, firm size and investment opportunities are positively and significantly associated with dividend policies and dividend payout decisions. On the contrary, there are some instances which show a negative relationship between profitability and dividend payouts indicating the need of reinvesting funds. A significant number of independent directors in the board also have an impact on the payout policies, albeit not a significant one. A number of positive NPV investment opportunities also bear a negative relationship with dividend payout as more money is retained to invest...
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...of mobile telecommunications corporate governance firms in Zimbabwe. By Mugombe Godfrey Background and Introduction The purpose of this study is to provide insight into the association between business performance of the telecommunications sector in Zimbabwe and corporate governance practices as prescribed in the Organization for Economic Cooperation and Development (OECD). It is widely believed that better corporate governance manifest itself in enhanced corporate performance and lead to higher economic growth (Brickley & James, 2011). There are four major players in the mobile telecommunications sector of Zimbabwe namely Econet Wireless Zimbabwe, Telecel Zimbabwe, NetOne and Africom. NetOne is a state controlled entity whilst the other three companies are privately owned with Econet Wireless Zimbabwe commanding the lion’s share of mobile telephone & broadband business in Zimbabwe (Econet Wireless Zimbabwe, 2013). Statement of the problem The major telecommunications companies in Zimbabwe like NetOne, Telecel, Africom and Econet have embraced corporate governance principles and practices since the turn of the new millennium. However, as Ernst & Young (2012) and Gwatiringa (2012) show, wide ranging differences on corporate performance exist in these companies even after the introduction of the multiple currency regime in 2009. It therefore remains unknown to the public stakeholders and the practitioners of corporate governance in general and potential investors...
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...MANAGING CORPORATE RESPONSIBILITY IN WIDER BUSINESS ENVIRONMENT NAME ID INTERNATIONAL COLLEGE OF BUSINESS & TECHNOLOGY LTD Edexcel BTEC Level 7 Professional Diploma in Strategic Management & Leadership Managing Corporate Responsibility in Wider Business Environment Table of Contents INTRODUCTION .................................................................................................................... 2 Page | 1 PART 01: .................................................................................................................................. 3 LO 1.1: Briefly explain how the globalization has an impact on a national economy ......... 3 LO 1.2: Discuss the influence of international institutions. .................................................. 4 LO 1.3: Explain the role of European Union on Unilever, UK. ........................................... 6 LO 2.1: Explain the importance of having good Corporate Governance for the organization ............................................................................................................................................... 7 LO 2.2 & 2.3: Discuss what regulatory requirements exist in the country shaping the corporate governance practices of an organization and their role in ensuring corporate stakeholder’s interest. ............................................................................................................ 8 LO 3.1: Discuss the economics of adopting a policy...
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...INTRODUCTION Corporate Governance / PUNB 413 students are required to prepare an individual assignment which is includes preparing summary of at least two articles that related to ISSUES IN CORPORATE GOVERNANCE focusing on Directors Remuneration and CEO Compensation. The article that I selected is mainly focus on Directors Remuneration, Corporate Performance, Board Characteristics and factors that influence in determining the Directors Remuneration and CEO compensation. This assignment plays a vital role in developing our understanding and providing a clear picture on Corporate Governance in real world’s perspective. ARTICLE 1: Board Compensation Structure and Firm Performance Ivan E. Brick, Oded Palmon, and John K. Wald January 15, 2003 SUMMARY: The article is mainly focused on the factors that influence Director’s compensation structure. The factors that influences the determination of the Director’s compensation structure are firms, CEO and governance structure characteristics. In addition, the article also identifying the significant relationship between the Directors’s compensation and firm performance and the consistency of the structure on firm value maximization. The impact of the compensation structure towards firm performance is mainly in changes in Q, ROA performance, future ROA and pay performance sensitivity. PROBLEM STATEMENT: Firm Performance Director’s Compensation Structure ...
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...3. Introduction Corporate Governance has become a subject in its own right over the past decade but Corporate Governance issues are as not new- there have been tensions from the beginning as the case of Salomon v Salomon [1897] illustrates. Despite the longevity the phrase ` corporate governance ` is somewhat `MALLEABLE`- i.e almost every author or book on the subject offers a different view of what the phrase means. In the broadest sense, it means the question of who should own and control the company and in its narrowest; it purely means the relationship between the shareholders and Directors. The importance o Corporate Governance (CG) can best be understood in the context of how large modern companies operate. Owing to the separation of ownership and management, there is a need to establish appropriate control monitoring procedures to ensure that management can effectively utilise entrusted resources to add values to business owners. The owners ( the investors/ shareholders) will not usually be involved in the planning and control of the business of the companies and there is a risk than the managers( Directors) may pursue their own interests even at the expense of the shareholders. In other words – conflicts of interest can arise. Moreover, there are a number of different interested parties/ stakeholders- e.g between controlling large shareholders and minority shareholders, creditors and shareholders, shareholders and employees. Thus CG can be defined as “a set of...
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...FUSION OF CORPORATE GOVERNANCE & CSR PRACTICES BUSINESS ETHICS AND CORPORATE GOVERNANCE Submitted to: Prof. I Sridhar Submitted by: Dhvani Shah (64689) FSB II TABLE OF CONTENTS TOPIC | Pg No. | Introduction | 3 | Concepts | 6 | Conceptual Discussion | 10 | Implementation of CG & CSR in corporate | 18 | CSR/CG framework | 21 | Bibliography | 30 | I. INTRODUCTION: CSR is concerned with the impacts that the activities of an organization have on the social, environmental and economic environment in which it operates. CG is concerned with the manner in which the senior management or Board of Directors direct, manage and control the organization and relate to shareholders. The concepts cannot be mutually exclusive but merge together, each offering a different yet complementary perspective on the activities of an organization, to form a robust strategic business management tool. The aim of the CSR and CG management system is to define, understand and improve the balance between entrepreneurship and ethical practice. Organizations must demonstrate this core organizational...
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...business failure and financial scandals around the world brought about the need for good governance practices. The United States of American, Brazil, Canada, Germany, France, England, Nigeria all witnessed financial failures in the 90s and in the recent periods. This view was supported by Bell et al (2000), that the last 20 years witnessed several bank failures throughout the world. Financial distresses in most of these countries were attributed to a high incidence of non – performing loans, weak management and poor credit policy. In the view of Omankhanlen (2011), the development was said to have reflected the deterioration in the quality of credit facilities, coupled with the ongoing reclassification of bank assets. The banking institution occupies a vital position in the stability of the nation’s economy. It plays essential roles on fund mobilization, credit allocation, payment and settlement system as well as monetary policy implementation. Management is expected to exhibit good governance practices to ensure achievement of it objectives and avoid the consequences of failure leading to loss of confidence. This view was supported by Wilson (2006) that poor corporate governance can lead market to lose confidence in the inability of a bank to properly manage it assets and liability, including deposits which could in turn trigger a bank liquidity crisis. Oluyemi (2005) considered corporate governance to be of special importance in ensuring stability of the economy and successful realization...
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...languages. The companies’ have subsidiaries in Europe, Middle East, India, Africa and Asia Pacific region. Using the companies’ annual report of the recent year ending 2014 and 2015 a corporate governance analysis can be made. Does the geographical location of this company impact on their corporate governance structure? The geographical location is important and has an impact of their corporate governance approach since where the headquarters is situated and proximity to the management board influence the decision making of the companies’ by laws, countries have to adopt a system or more than one system of governance as seen in France. Hugo Boss and Burberry are companies’ whose approach of corporate governance are stakeholder and shareholder oriented respectively. Letza et al 2004, compares shareholders and stakeholders approach as the two distinct model adopted over the years by advanced industrial nations and governments. The world is now a global village, funds can be gotten internationally, so the need to boost income, growth, profitability and longevity is sought after. In order to build cross border investment and growth, the demand for transparency and accountability has to be realized so the need of governance code is subject to be created and the model applied impacts on their way of governance structure....
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...CORPORATE GOVERNANCE AND SOCIAL RESPONSIBILITY ➢ INTRODUCTION AND IDENTIFICATION The concept of corporate governance has attracted considerable attention, domestically and internationally, in recent years. Following a number of high profile corporate collapses, such as HIH insurance and One.Tel in Australia, and Enron and WorldCom in the United States (US), a number of regulatory changes aimed at improving corporate governance have been implemented. The corporate world is facing the notion of Corporate Social Responsibility (CSR) wherever it turns these days. On a wide range of issues corporations are encouraged to behave socially responsible. Why is corporate governance important? Corporate governance refers to the way that Boards oversee the running of a company by its managers, and how Board members are held accountable to shareowners and the company. This has implications for company behavior not only to shareowners but also to employees, customers, those financing the company, and other stakeholders, including the communities in which the business operates. Research shows that responsible management of environmental, social and governance issues creates a business ethos and environment that builds both a company’s integrity within society and the trust of its shareowners. ➢ What are the theoretical concepts? ➢ What are the ethical issues? ➢ What impact does globalisation have? Due to...
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...IMPACT OF CORPORATE GOVERNANCE ON FIRMS PERFORMANCE: CASE OF FAMILY FIRMS IN MALAYSIA CHAPTER 1: INTRODUCTION 1.0 Background of Study For many years and in many economies, most of business activity was accompanied by proprietorships, partnerships, or closed corporations. In these forms of organizations, a small and closely related group of individuals belongings the same family or co-operating in business for lightly periods runs the firm and share the profit. A lot of attention, has focused on the relationship between ownership structure and corporate performance for instance, a research agenda on the implications of ownership structure on corporate governance by La Porta et al (2000) sustain the legal structure does not offer sufficient protection for outside investor or entrepreneurs, original owners are forced to maintain large position in their companies which results in a concentrated form of ownership thus having implications on ownership structure. On the other hand, more of evidence according to Shirley and Walsh (2001) indicates the private held firms are more efficient and more profitable than publicly held ones although the evidence differs on the relative merit of the identity of each private owner. In 1976, Jensen and Meckling provided results of their researches on ownership structure and firm performance by dividing shareholders into internal investor with management right and external shareholder who are investor without the ballot right. The...
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...DISSERTATION PROPOSAL The Impact of Foreign Share Ownership on Financial Performance in Australia Word Count: 2,696 Table of Contents 1. Introduction ........................................................................................................................ 3 2. Literature Review ............................................................................................................... 5 2.1 2.2 3. 4. Corporate Governance in Australia ............................................................................. 5 Ownership Structure and Financial Performance........................................................ 6 Hypothesis .......................................................................................................................... 8 Methodology....................................................................................................................... 8 4.1 4.2 Model Design .............................................................................................................. 9 Sample ....................................................................................................................... 10 5. 6. References ........................................................................................................................ 11 Appendix .......................................................................................................................... 14 6.1 6.2 Structure .................
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