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Corporate governance: An international state of the art
Abstract
Corporate governance has as ancient a pedigree as the formation of companies. However, six contemporary developments have provided a focus which makes this the era par excellence of corporate governance. Under review are a representative set of the economies of the world. A start is made with the UK and the Cadbury Report, which in similar fashion to the development of British Quality Standard 5750 into ISO 9000, has now itself taken on world currency. The end piece of Cadbury-related developments was the final Report of the Hampel Committee of January 1998. The USA spawned several reports which fed into the Cadbury initiative, notably the Treadway and COSO Reports, as well as the influence of the Securities and Exchange Commission. A consideration of Canada is followed by the European dimension and the study carried out by Ernst and Young. Finally South Africa, Australia and Japan are treated and conclusions drawn, including the collaborative partnership that may be formed between management accountants and internal auditors.
... Corporate governance is an evolving field which have gained popularity in the last decade after the demise of Enron, Worldcom, Arthur Anderson etc in the United States which have forced academics, legal practitioners, accounting and other professionals, regulatory agencies, government institutions, NGOs and international financial institutions to pay attention to corporate governance reforms, (Kay and Silberston 1995;Vinten, 1998;Aquiler and Luervo-caruza, 2004;Bhasa, 2004;Mardjono, 2005;Wieland, 2005;Chambers, 2006;;Malin, 2008;Judge, Douglas and Kutan, 2008;De Cleyn, 2008). Other Countries have had similar corporate scandals, for example HIH Insurance in Australia; Marconi in UK, Parmalat in Italy; Regal Bank, Leisure Net and Krion in South Africa and Cadbury PLC in Nigeria. ...
... Corporate governance has a leadership dimension, because it provide directional leadership to organizations by creating an enabling environment which integrates and systematize various collaborative efforts for setting objectives and achieving corporate goals (Ugoji and Isele, 2009). Good corporate governance helps to prioritizes organizational objectives achieve good corporate performace, enhances ethical decision making within organizations where shareholders' concerns and stakeholders interest and are addressed properly (Sanda, Mikailu and Garba, 2005;Wieland, 2005;Chambers, 2006;Malin, 2008;King, 2006;Andreasson 2009;Vinten 1998;Aquiler and Luervo-caruza, 2004;Gatamah 2008, Roe, 2003De Cleyn 2008). ...
This paper examines the challenges to corporate governance reforms in Nigeria from the promulgation of the Corporate and Allied Matters Act of 1990, the introduction of the 2003 Security and Exchange Commission (SEC) code of best practices in corporate governance to the 2006 Central Bank of Nigeria(CBN) code of corporate governance for banks in Nigeria. It uses related literature to review and discuss the identified challenges. It discovers that some of the challenges to corporate governance reforms in Nigeria stem from the country’s culture of institutionalized corruption and political patronage which is characterized by weak regulatory frameworks and refusal of government agencies to enforce and monitor compliance. The complexity of these challenges are compounded by the wide spread poverty and high unemployment which discourages a culture of whistle blowing. A set of suggested solutions were made including the separation of business from politics, the establishment of a special corporate affairs tribunals within the judiciary to try violators, promoting the culture of whistle blowing, enhancing business through moral education and promoting resource based development through fiscal federalism.
... De maneira geral, a Governança Corporativa tem uma linhagem antiga quanto à formação de empresas (Vinten, 1998), fornecendo um ponto de partida útil para melhor entender como se aplica a governança nas organizações esportivas, sendo elas amadoras ou profissionais, a partir de uma perspectiva da gestão do esporte, bem como sob a ótica de fatores econômicos, políticos e sociais que impactam nas funções da governança promulgada dentro de organismos desportivos (Hoye e Cuskelly, 2003). ...
... Ressalta-se, com isso, que esta informação vai ao encontro do que foi evidenciado no parágrafo anterior, e também nos Gráficos 5 e 6 e na Figura 4, mostrando e concluindo, assim, sobre a importância destes países no cenário da Governança Corporativa nos esportes. Tal informação vai ao encontro do estudo realizado por Vinten (1998), que confirma o valor destas nações (Inglaterra, EUA e Canadá, respectivamente) para o desenvolvimento da Governança Corporativa no mundo. ...
Neste artigo analisa-se o perfil e a evolucao da pesquisa em Governanca Corporativa nos Esportes. Metodologicamente, realizou-se um estudo bibliometrico dos artigos publicados nos periodicos internacionais da area de administracao, contabilidade, economia e financas, nos 23 anos entre 1990 a 2012. As analises de citacoes, cocitacoese frequencias permitem um conjunto de observacoes: o crescimento da pesquisa no tema a partir de 2007; O Journal of Sport Management se revela como o periodico mais citado e com maior centralidade de grau; David Shilbury que emerge como o pesquisador mais proficuo e com maior centralidade; a Universidade de Alberta como a origem do maior numero de artigos e a mais central; e Russell Hoye, Graham Cuskelly e Lisa Kikulis os autores mais citados. Este estudo e relevante para nortear pesquisa futura sobre o tema de Governanca Corporativa nos esportes, sendo, assim, de especial relevância para estudantes de pos-graduacao stricto sensu e outros pesquisadores recem chegados a disciplina. Palavras-chave: esportes, estudo bibliometrico, Governanca Corporativa.
... The second assumption is: "The minimization of agency costs contributes to a better economic performance of co-operatives." (Shleifer, Vishny 1997;Vinten, 1998;Treter;Kelm 2004, Allen, 2005, Haspeslagh, 2010 In turn, the third assumption, derived from the previous ones, argues that: ...
This study focuses on examining the relationship between corporate governance practices and the performance of agricultural co-operatives in Mato Grosso do Sul, Brazil. The primary objective is to address agency conflicts within co-operatives by investigating the extent to which corporate governance practices align the interests of co-operatives and their members. The research approach involved a document analysis using the bylaws and meeting minutes of 21 co-operatives, totaling 84 documents. The assessment of corporate governance levels was based on a comparison with the 40 recommendations proposed by the Brazilian Co-operatives Organization (OCB, 2016), categorized into five major areas. The study is grounded in agency theory, particularly focusing on monitoring and incentives as key aspects. The findings reveal that the majority of recommended governance practices are concentrated in the "management board" area, while the co-operatives' most adopted practices are related to the "members and general assembly" dimension, which primarily involves monitoring efforts. However, when considering the full set of OCB's recommendations, only two were fully implemented by the co-operatives. These results indicate a low level of corporate governance in agricultural co-operatives in Mato Grosso do Sul.
... The second assumption is: "The minimization of agency costs contributes to a better economic performance of co-operatives." (Shleifer, Vishny 1997;Vinten, 1998;Treter;Kelm 2004, Allen, 2005, Haspeslagh, 2010 In turn, the third assumption, derived from the previous ones, argues that: ...
The aim of this study is to analyze the relationship between the adoption of corporate governance practices and the performance of agricultural co-operatives in Mato Grosso do Sul, Brazil. The document analysis was based on bylaws and meeting minutes from 2012 to 2014, from a sample of 21 co-operatives, totaling 84 documents. In order to assess the level of corporate governance we compared the co-operatives’ documents to the 40 recommendations proposed by the Brazilian Co-operatives Organization (OCB, 2016). These are distributed in 5 major areas: i) members and the general assembly; ii) management board; iii) supervisory board; iv) advisory bodies and audit; and v) ombudsman and co-operatives’ relationship with their members. The theoretical presupposition is that the adoption of corporate governance aligns the interests of the co-operatives and their members, which minimizes agency conflicts. To that end, we assumed the following theoretical precepts of the agency theory: i) monitoring, and ii) incentives. The results showed that the majority of governance practices recommended are related to the “management board” area, while those most adopted by the co-operatives are related to the dimension “members and general assembly”—which are strongly related to monitoring efforts. Considering the totality of recommendations proposed by OCB, only two have been 100% adopted by the co-operatives. The results show a low level of corporate governance in agriculture co-ops in Mato Grosso do Sul. We conclude that there is still a long way to go until governance practices become a mechanism to minimize agency conflicts.
... The pattern-maintenance of appointing individuals without the necessary financial acumen to the audit committee and BOD to serve on Satyam's board will not be fit-for-purpose as a structuralist view will envisage that these constituent elements do not contribute to good governance (Parson, 1961b, p. 425). Current corporate governance practices, including "the roles [and responsibilities] of non-executive versus executive members of the board (Pass, 2004), the independence of the board of directors (Zandstra, 2002), the role, independence and disclosure of [the] audit committee (Rezaee et al., 2003), [and] the enforcement of compliance and role of internal auditors (Vinten, 1998(Vinten, , 2000(Vinten, , 2002" are all taken into consideration; but, it is how they work as a functioning unit that is given prominence in the overall scheme of things (as cited in Mardjono, 2005, p.273). The functionalist's emphasis on looking at the organisation as an integrative unit coupled with exploring the individual's socialisation within the wider social system have more mileage to improve current corporate governance practices than one that is based on narrow agency and stewardship frameworks (Palmer, 2012;Power, 2013;Pande & Ansari, 2014). ...
The paper uses Satyam Computer Services Limited as a prototypical case of corporate governance failure and recommendations for reforms. In making recommendations for corporate governance best practices, the paper analyzes Satyam’s corporate governance framework and management controls through a structural functionalist lens. The case is based on materials obtained from the news and print media, published articles, and interviews given by experts who commented on the case. Corporate governance data were obtained from the Securities and Exchange Commission’s (SEC) Edgar database. The findings suggest that corporate governance best practices should not be separate from the discrete parts of the organization. A wider context that encapsulates socio-cultural factors must not only be part of corporate governance mandates; but, also integral in the operational logistic of the corporation. As part of this discussion, the paper explicitly reviewed the governance structure and the make-up of the board of directors that were in place at Satyam prior to the resignation of Chairman Ramalinga Raju and his admission that he was involved in financial statement irregularities. Particular emphasis was placed on how management control systems and cultural controls in companies can shape corporate governance mandates to build effective governance framework.
... For instance, some of the many benefits of corporate governance for countries in the GCC region in particular and the MENA region, in general, are that it reduces financial risks and uncertainties arising from corporate mismanagements and conflicts (Ghabayen 2012, p. 170).It also enhances the company's productivity and performance, attracts investment capital, and provides a good working relationship between a company and the environment (Vinten 2017).However, effective corporate governance implementation in Saudi Arabia is at an amateurish stage. It is not as professional, especially when juxtaposed with other countries in the west, such as the United Kingdom, France, and Australia. ...
... Such inspection coupled with appropriate corrective response should be systematically undertaken by the TOPSIA Organization throughout the public sector. Vinten (1998) Cites a number of worldwide collapses due to poor corporate management and compares the UK response (i.e. the Cadbury Code) with that of South Africa (i.e. the King Committee). Explains that the King recommendations are very similar to Cadbury but also cover worker participation, affirmative action programmes and a code of ethics, are partly aspirational in nature, and are designed to be kept under constant review. ...
Deals with corruption in the public sector and ways in which to prevent it. CITATION: Last, A. (2000). The Key to Government Corruption: A South African Perspective with Global Applicability. Cape Town.
... Shareholder activism and the role of large shareholders is one of the most prominent of these issues. Other corporate governance topics that are frequently studied include analyses of directors and executives, which regularly cover the role of independent directors (Bebchuk et al. 2008;Ravina and Sapienza 2009;Kang and Lam 2017;Cruz-Ros 2009), and international corporate governance comparisons (Bebchuk et al. 2008;Vinten 1998). ...
This paper assesses the effects of industry shocks on shareholder votes in the financial services industry. We analyze votes on managers’ proposals for executive compensation and the election of directors in NASDAQ financial companies from 2003 to 2017. Our analyses imply that shareholders’ reactions to major industry shocks are reflected in shareholder voting decisions. We report evidence of significant changes in the fundamental drivers of those decisions for four recent industry shocks: the onset of the financial crisis in 2007, the subsequent stimulus decisions by G20 countries, the European sovereign debt crisis, and the emerging markets crisis. These findings can help managers understand what drives shareholder satisfaction in the uncertain environments that follow industry shocks. This insight can help managers design successful strategies to cope with the effects of such shocks.
... Interest in corporate governance has grown in the last three decades bringing the term from obscurity to the centre of attention of many academic and professional studies. This interest appears more appropriate at this time, when business executives and auditors are continually being held to higher standards of accountability and responsibility, even though corporate governance issues may be traced back to the nineteenth century with the advent of limited liability incorporation (Vinten, 1998). Corporate governance is viewed as an indispensable element of market discipline (Levitt 1999) and this is fuelling demands for strong corporate governance mechanisms by investors and other financial market participants (Blue Ribbon Committee 1999; Ramsay 2001). ...
This paper examines the impact of corporate governance on firm performance using cross sectional data from non-financial companies listed in the Egyptian Stock Exchange. The 88 non-financial companies on EGX100 index of listed companies on the Egyptian Stock Market are studied to examine the relationship between ownership structure, board structure, audit function, control variables and firm performance by using OLS regression analysis. The results show that ownership structure has no significant effect on firm performance. The only board structure variable that has an effect on firm market performance is board independence. Firm book value performance is affected by both board independence and CEO duality. Firm size and leverage have varying effects on both market and book value performance of firms
... The governance structure sets the business objectives, provides means to attain those objectives and furthermore the performance is measured through business governance to ensure the attainment of those goals with effective utilization of resources. The scope of business governance, to some (Monks and Minow 2001, Shleifer and Vishny 1997, Vinten 1998, is limited to the question of shareholders value i.e. how the business owners can motivate and/or secure that the corporate managers will deliver a competitive rate of return and to some others (Freeman and Evan 1990, Freeman 1994, Jensen 2002, Luoma and Goodstein. 1999, Marens and Wicks 1999 it is extended to the interests of multiple stakeholders. ...
Corporations being powerful institutions must be more accountable for their business policies and practices as their activities, for better or worse, have a significant impact on individuals, whole communities and society at large. But unfortunately, Capitalism at the beginning of the 21st century with overemphasis on economic performance has evolved the rule of unproductive economic activities, exploitation of customers, illegal monopolies, political patronage and personal gains. The observed inconsistency between the role and rule of business, being detrimental to the society has raised a concern about implementing business governance that would integrate value framework, ethical framework and moral framework under which business decisions are taken. To comply with the moral standards for optimizing the outcome for directly negotiating parties the corporate need to adopt a dual goal concept: a strategic goal and moral goal. An ideal situation is possible once the ethical perspectives of a business is internalised through value-based negotiations and exchanges at all levels, social, political and symbolic; hence broad objective of this paper is to put forward some guiding principle for the business firms to evolve responsible behaviour and avoid bad governance and business related violence.
... Consequently, efficient CG is critical in increasing the interests of all parts of the organizations. In addition, it plays a vital role in facilitating and increasing the efforts of government to guarantee the firms accountability (Vinten, 1998). Claessens (2003) reviews CG extensively, and points out that CG influences firm performance by two main aspects; the first aspect is by creating new access to external financing through attracting new investments and funds which may lead to effective employment creation, greater investment and higher growth. ...
Corporate governance (CG) has received much attention in the current studies all over the world especially after many corporate scandals and the failures of some biggest firms around the world such as Commerce Bank (1991) Enron (2001), Adelphia (2002), and World Com (2002).The aim of this study is to examine the relationship between board mechanisms (audit committee size, audit committee composition, board size, and board composition) and firm performance (ROA) based on the annual reports of listed companies in the year 2011 of sample of non-financial firms in the Saudi Market (Tadawul). For the purpose of this study, data was collected from a sample of 102 non-financial listed companies.Furthermore, an analysis of regression analysis is utilized to examine the relationship between board characteristics and firm performance. The results of this study reveal that audit committee size, audit committee composition and board size have no effect on firm performance in the selected sample while board composition has a significant negative relationship with firm performance.
... Sendo que destas, as que obtiveram maior centralidade de grau foram a Inglaterra e os EUA. Esta informação contribui para melhor compreender a importância e o valor destes países para o desenvolvimento da governança corporativa (VINTEN, 1998). É interessante notar que, entre os 12 países que mais publicaram, 10 são de economias desenvolvidas e somente dois de economias emergentes. ...
Este artículo analizó comparativamente la producción académica del tema Gobernanza Corporativa sobre la óptica de los siguientes periódicos: Corporate Governance y Corporate Governance: An International Review, en el período de 2001 a 2012. Metodológicamente se realizó un estudio bibliométrico con análisis de redes sociales, en un universo de 1.008 artículos. Los resultados permiten concluir que hay una centralidad de red de los autores, IESs y países. Kakabadse, N., fue el autor más proficuo; Cranfield University, fue la IES que más publicó; Inglaterra, el país más productivo. Las temáticas más vistas en los artíc ulos fueron: Consejo de Administración, Responsabilidad Social Corporativa y Estructura de Propiedad.
... In this respect, the independence of the board from the management may facilitate the turnover of current managers in the case of poor performance or financial distress (Weisbach, 1988). Other scholars have indicated the importance of assuring internal and external auditors' independence (Rezaee, Olibe, & Minmier 2003;Vinten, 1998Vinten, , 2002. In particular, internal auditors who maintain independence from the management and external auditors who are not overly involved with their clients are more likely to detect risks or signs of failures. ...
PurposeThis study attempts to analyze the role of governance mechanisms in municipal bankruptcy, which appears to be a neglected area of research. The analysis considers both the organizational level (micro) and the regulatory system (macro).
Methodology/approachWe use a relevant case of municipal bankruptcy in Italy to discuss the influence of governance characteristics, such as the political and management structure, interaction, and behaviors. The issues related to the accounting system and external audits are also considered. The data for this study are obtained from secondary sources such as audited budgetary reports, public documents, and reports from the Supreme Audit Institution.
FindingsThe study indicates that the spoils system can favor the politicians’ exercise of power over public managers and undermine the capacity to prevent and manage financial distress. Poor accounting and weak control systems may facilitate this process. The high turnover of top management throughout a mayor’s term in office may reflect political pressure to force accounting rules and achieve flexibility to obtain the expected results or to correct poor financial performance.
Practical implicationsTo avert municipal bankruptcies, regulations should consider enforcing ex ante control by external oversight bodies, forbidding risky operations and limiting the spoils system for financial management positions and internal auditors.
Originality/valueMunicipal defaults around the world have indicated that regulations and audits are ineffective to prevent local governments from failing. A full understanding of complex mutual interactions between the mechanisms of governance and the behaviors of politicians and managers can provide valuable insights to prevent local governments from failing.
... Interest in corporate governance has grown in the last three decades bringing the term from obscurity to the centre of attention of many academic and professional studies. This interest appears more appropriate at this time, when business executives and auditors are continually being held to higher standards of accountability and responsibility, even though corporate governance issues may be traced back to the nineteenth century with the advent of limited liability incorporation (Vinten, 1998). Corporate governance is viewed as an indispensable element of market discipline (Levitt 1999) The term corporate governance describes the system by which companies are directed and controlled. ...
This paper presents the results of an extensive analysis of derivative use by 692 companies in 20 countries across the African continent. The results show that 29% of non-financial companies in Africa use derivatives but that derivative use is dominated by firms within South Africa. The study finds that 54% of firms in South Africa use derivatives but only 5% of non-financial firms in Africa (excluding South Africa) use derivatives for hedging purposes. The majority of derivative use is directed toward the management of currency risks and the derivative instrument of choice is OTC forwards. Swaps are used to hedge interest rate risk and minimal use is made of OTC or exchange traded options and futures.
... The definition of corporate differs depending on one's view of the world. Many existing studies in good corporate governance have focused on: the roles of non-executive versus executive members of the board (Pass, 2004), the independence of the board of directors (Zandstra, 2002), the role, independence and disclosure of audit committee (Rezaee et al., 2003), the enforcement of compliance and role of internal auditors (Vinten, 1998(Vinten, , 2000(Vinten, , 2002. They are altogether grouped into under mentioned values of corporate governance perspectives: To explain the primary impediments to good governance, the International Swaps and Derivatives Association (ISDA) (2002) reminds us that modern economic theory has established an approach to construct the corporate governance through the separation of two main functions in firms, which are: 1) Principals: The owners of the companies who hold claims over the net income of the company's business no matter whether it is positive or negative, who then appoint the agent; and 2) Agents: Agents are those who execute duties and responsibilities in the companies on behalf of the principals. ...
Auditors lodge an exclusive position in the business community when they implement an audit for clients. Auditors are called upon to verify to financial statements and to safeguard the interest of various parties. In recent years the audit practice because of several humiliations has been diluted. This empirical study shows that several factors effect on audit independence in Bangladesh. The results show that there is a huge difference between auditors and bankers on audit independence. It has come to the conclusion that for solving this problem well-established corporate governance can improve audit independence.
... Corporate governance has been a contentious area internationally since the global stock market meltdown of the late 1980s (Goodjik 2003;Sonnenfeld 2002;Baker and Owsen 2002;Vinten 1998;Firstenberg and Malkiel 1994;Leighton and Thain 1990). High level corporate failures during the late 1980s and early 1990s such as Bond Corporation and Quintex Corporation in Australia and Polly Peck and BCCI in the United Kingdom had initiated moves towards reform. ...
... According to Pye (2000), phrases like 'corporate governance' and 'shareholder value' were almost absent in the literature in early 1980s as people ran their organisations smoothly without any tactical, ethical and profitable difficulties. Whereas in late 1980s curiosity in corporate governance grew rapidly among academics and other stakeholders such as practitioners, legislators, policymakers, creditors and shareholders, as their organisations experienced difficulties in raising money and more difficult economic times beset them (Pye, 2000;Vinten, 1998). ...
This study examines the relationship between corporate governance and financial performance of Sri Lankan Microfinance Institutions (MFIs). The OLS regression, fixed effect and random effect models are used to analysis an unbalanced panel data comprising 300 firm-year observations over the period 2007 to 2012. We fine that financial performance of Sri Lankan MFIs improves when MFIs have female CEO, female chair, CEO/chairman duality, independent directors and client representation on the board rather than donor directors on the board. The financial performance may reduce with the higher number of female director representation. We also find no significant relation between international directors on the board, internal audit and firm performance of MFIs in Sri Lanka. This research provides insight for the policy-makers regarding corporate governance in Sri Lankan MFIs.
... Issues of corporate governance are not new (Vinten 1998). They have emerged with the birth of corporations (Grant 2003). ...
This paper will examine the impact of corporate governance on the profitability of banks using the agency theory. The profitability of banks is measured by return on assets (ROA) and return on equity (ROE). A total of twelve listed bank holding companies are examined over a ten-year period. Based on the panel data analysis, none of the conventional measures of corporate governance is significant as hypothesized. Board's independence and institutional ownership have negative impact on ROE significantly. Apart from that, as the findings of the effect of corporate governance on bank profitability are inconclusive, other factors such as culture, local prevailing laws and business environment, might need to be considered.
... There is also an international perspective, with the UK, USA and the EU demonstrating a keen awareness of the challenges facing organizational governance. More recently, Japan, the Middle East nations as well as the USA and Europe are providing legislative support to the political rhetoric, calling for greater protection for those stakeholders affected by governance issues at both national and supranational levels (Black et al., 1999;Vinten, 1998). ...
... Although the term ''corporate governance'' is a name given to describe how companies control and manage their activities as well as their members' behavior, the last few years have witnessed increasing calls to improve public organizations' governance systems (Lapsley, 1993;Craven & Stewart, 1995;Hodges, Macniven, & Mellett, 2004;Bird, 2001). Different countries are implementing numerous ''governance'' reforms aiming at improving public organizations' performance in line with the private sector ones (Olson, Guthrie, & Humphrey, 1998;Hodges, Wright, & Keasey, 1996;Vinten, 1998). Accordingly, politicians, public servants and reformers have had to manage and control various activities such as the geographic needs, the delivery speed and the product or service quality. ...
Purpose – The paper explains how internal reporting systems, as embedded practices informing organizational actions and “know-how”, contributed to the inertia in implementing a corporate form of governance in a transitional public organization in a developing country – Egypt.Design/methodology/approach – The paper synthesizes an institutional theory framework in order to capture the case study mixed results. Drawing on DiMaggio and Powell's (1983) notions of isomorphic mechanisms, Ocasio (1999) and Burns and Scapens’ (2000) notions of organizations’ memory, history, cumulative actions and routines, Brunsson's (1994) notion of organizational institutional confusion as well as Carruthers's (1995) notion of “symbolic window-dressing” adoption of new practices, the paper explores the dynamic of a public hospital corporatization processes. Data collection methods include semi-structured interviews, documentary evidence and direct observation.Findings – The case study evidence shows that the interplay between the new form of “corporate” governance and the intra-organizational power, routines and “know-how” created internal organizational confusion and changed organizational members’ narrative of risk and uncertainties.Research limitations/implications – The paper does not reveal the role of reformers involved in the public sector “governance” reform in developing countries. Exploring such a role goes beyond the scope of this paper and represents an area of future research.Originality/value – The paper provides a comprehensive account of public sector “governance” reform in a developing nation, while exploring the role of management accounting and costing systems in facilitating or otherwise that reform processes.
... For example, in the UK, the Cadbury Committee (1992) was established in response to high profile corporate failures such as Polly Peck and BCCI (Laing and Weir, 1999, p. 457). In Canada, the collapse of Atlantic Acceptance Corporation Limited in the 1960s propelled the adoption of audit committees (Vinten, 1998). ...
Purpose
The purpose of this paper is to examine the role and function of audit committees in public companies in Barbados since the corporate scandals of Enron and WorldCom in the USA.
Design/methodology/approach
The study used a mixed‐methods approach of self‐administered questionnaires, interviews with directors, audit committee members and auditors, and a content analysis of the published annual reports.
Findings
There was no full‐scale adoption of audit committees. Membership in audit committees tended to vary between three and four, and audit committees met on average four times a year. There were mixed views on audit committees having broader roles such as business strategy, assessment and management of risks. There were also excellent working relationships among audit committees, internal and external auditors. The independence of audit committees was questionable.
Research limitations/implications
The concept of audit committee is relatively new in Barbados. Further, there are Boards dominated by directors with major shareholdings. This study also relied heavily on US‐centric literature and the perceptions of audit committee members. These factors are likely to limit its usefulness to other non‐US countries. Future research can measure stakeholders' perceptions of the role of audit committees.
Practical implications
This study is important to academics and practitioners in understanding the role and function of audit committees in a small country.
Originality/value
This study sets out a best practice model for the adoption of audit committees in small countries like Barbados.
... Corporate governance is an engaging, fascinating and important subject that has generated a plethora of literature and significant global discourse in the United States of America, Europe and Australia (Kay and Silberston, 1995); Vinten, 1998;Aquilera and Luervo-Cazurra, 2004;Bhasa, 2004;Mardjono, 2005;Wieland, 2005;Chambers, 2006;Mason, Kirkbride and Bryde, 2007;Hill, 2008;Malin, 2008;Judge, Douglas andKutan, 2008 andDe Cleyn, 2008). Such international organisations like the World Bank, IMF and OECD have in their different ways through workshops, conferences, research studies and policy initiatives contributed immensely to the development of global standards of good corporate governance. ...
The paper traced the nascent history of corporate governance system in Nigeria and noted the paucity of literature in the subject. Mainstream issues of corporate governance in the country emerged with the enactment of the Companies and Allied Matters Act of 1990 (CAMA 1990), which established the Corporate Affairs Commission (CAC), and charged it with the responsibility of overseeing the regulation and supervision of the formation, incorporation, registration, management and winding up of companies. The corporate governance codes of both the Securities and Exchange Commission (SEC) and the Central Bank of Nigeria (CBN), gave impetus for the development of corporate governance structure, to ensure transparency, accountability, probity, integrity and fairness in the management and control of the public corporations, and thereby creating value for the shareholders and stakeholders. Major challenges which required urgent attention to enhance the effectiveness of the system were noted thus: making the voluntary codes mandatory; developing more effective mechanisms for monitoring compliance and enforcement; developing strong internal control mechanisms to checkmate the boards oversight responsibility; crafting strategies to enhance shareholders activism and the extension of the codes to state-owned enterprises with more cases of corporate governance abuses.
... The definition of corporate differs depending on one's view of the world. Many existing studies in good corporate governance have focused on: the roles of non-executive versus executive members of the board (Pass, 2004), the independence of the board of directors (Zandstra, 2002), the role, independence and disclosure of audit committee (Rezaee et al., 2003), the enforcement of compliance and role of internal auditors (Vinten, 1998(Vinten, , 2000(Vinten, , 2002. They are altogether grouped into under mentioned values of corporate governance perspectives: ...
External auditors occupy a unique position in the business community when they perform an audit for clients. The auditors are called upon to attest to financial statements and to safeguard the interest of various parties. However, in recent years the audit practice because of several scandals has been undermined. This empirical study shows that several factors affect on audit independence in Iran. The results show that there is a huge difference between auditors and bankers on audit independence. The author has come to the conclusion that for solving this problem well-established corporate governance can improve audit independence.
... The definition of corporate differs depending on one's view of the world. Many existing studies in good corporate governance have focused on: the roles of non-executive versus executive members of the board (Pass, 2004), the independence of the board of directors (Zandstra, 2002), the role, independence and disclosure of audit committee (Rezaee et al., 2003), the enforcement of compliance and role of internal auditors (Vinten, 1998Vinten, , 2000Vinten, , 2002). They are altogether grouped into under mentioned values of corporate governance perspectives: Accountability (Spira, 2001); Integrity (Grant, 2003); Efficiency (Walker and Fox, 2002); and Transparency (Rezaee et al., 2003). ...
This paper examines the concept of brand loyalty in Fast Moving Consumer Good (FMCG) markets. The primary objective of the study was to explore why loyalty develops in FMCG markets from the consumers’ perspective. In addition, this study explored the consumers’ perspective on the types of bonds that exist in FMCG markets and the role of bonds in the development of brand loyalty. The dominant conclusion arising from this study is that brand loyalty exists in FMCG markets for both cognitive and emotional reasons. Essentially this research determined that the development of brand loyalty is predicated on the development of customer-brand bonds. This research concludes that the challenge for marketers is to develop and nurture the bonds that lead to and that can strengthen brand loyalty. The research also concludes that brand loyalty studies in the future should focus on both cognitive and emotional reasons for brand loyalty and the role of bonds therein. Exploring brand loyalty in this way should assist in the analysis of and understanding of brand loyalty in FMCG markets and should consequently result in the development of effective marketing strategies designed to build brand loyalty.
... The definition of corporate differs depending on one's view of the world. Many existing studies in good corporate governance have focused on: the roles of non-executive versus executive members of the board (Pass, 2004), the independence of the board of directors (Zandstra, 2002), the role, independence and disclosure of audit committee (Rezaee et al., 2003), the enforcement of compliance and role of internal auditors (Vinten, 1998(Vinten, , 2000(Vinten, , 2002. They are altogether grouped into under mentioned values of corporate governance perspectives: ...
International Journal of Business and Management, Vol. 3, No. 12, December 2008, all in one file
This article aims to identify the factors that influence the quality of
the internal audit of public institutions. In a hypothetical-deductive
approach, the article has examined four factors. The data is collected
from one hundred and thirteen internal auditors of twenty-eight
Beninese public internal audit bodies. The various statistical tests
carried out have shown that the technical and professional parameters of the audit have a positive influence on the quality of the
public internal audit while the auditors are independent of the
exogenous factors.
The purpose of this study is to present a case for the need for audit committee in Constituency Development Fund to promote corporate governance and accountability in constituency development fund management in Nairobi Province, Kenya. The study provides an analysis and critique of the extent of engagement research in the field of corporate governance and accountability in constituency Development Fund management and present case for further research that may be directed to outside Nairobi province. The study found that the extent of literature in the field of corporate governance and accountability and reporting in contrast to the field to management CDF in Nairobi had largely ignored the practice within CDF organizations. The study arguesthat CDF can benefit from the methodological and theoretical insights of audit committee and other disciplines. The study suggests where further contributions might be made by future research endeavors engaging with audit committees with organizations. Engaging audit committee in CDF governance and accountability has the potential to improve theorizing practice and the sustainability performance with organizations. Drawing on the methods and theories of other disciplines and the papers in the special issues (of audit committee) the study presents away forward for researchers engaging with audit committees in organizational practicing corporate governance and accountability.
Corporate governance is the mechanisms, process and relations by which corporations are controlled and directed. Governance structures and principles identify the distribution of rights and responsibilities among different participants in the corporation such as the board of directors, managers, shareholders, creditors, auditor's regulators and other stakeholders and also includes the rules and procedures for making decisions in corporate affairs. Corporate governance includes the processes through which corporation's objectives are set and pursued in the context of the social, regulatory and market environment. In theory, the board is responsible to the shareholders and is supposed to govern a company's management. But in many instances, the board has become a servant of the chief executive officer (CEO), who is typically also the chairman of the board. The study aims to investigate the relationship between corporate governance mechanisms and firm financial performance of the Nigerian petroleum marketing industry. For the study goal data was collected from financial statement of 6 sample companies from 2004-2014. The study utilized three variable including board size, board composition as the independent variables, in addition return on equity (ROE) was chosen as firm financial performance measurement in other word dependent variable of the study. The researchers utilized secondary wellspring of data with the end goal of this study. Ten years (2004-2014) yearly reports and records of the examined organizations were gotten from significant sources, (Nigerian stock exchange, all African sites and sample companies domain), data extracted from financial statement and notes to the financial statement of the sample companies of the Nigerian petroleum marketing industries. The result found that, board size is negatively related to return on equity while the relationship between board composition with ROE is positive but not significant.
Over the last decade or so, the focus on information disclosed in financial statements, corporate governance andthe role of the audit committee to monitor and oversee financial reporting has increased. This is largelyattributed to the global business scandals caused mainly by fraudulent financial reporting. In response, the roleof audit committee was questioned in an attempt to maintain user’s confidence in corporate financial reportingand improve the effectiveness of an adequate internal control Not least because, an audit committee is anindependent body created by the board to oversee financial reporting and disclosures, monitor effectiveness ofinternal control, and external and internal audit functions.
At present, there is no conclusive evidence on the role and effectiveness of the audit committee. At one end ofthe spectrum there are audit committees that see their role as the validation of financial statements, while at theother end, are those who have broadened their role to include oversight of performance and critical high levelbusiness and operating tasks.
The purpose of this research is twofold: First: to investigate the state of the art of audit committees in Bahrainregarding composition, meetings, independence and role of audit committees. Second, since “Blue Ribbon”recommendations were issued in 1999, effectiveness of audit committee has become a cornerstone for corporategovernance. Therefore, an objective will be to assess effectiveness of audit committee.
The last few decades have witnessed several changes in the world economic system: consolidating trend of globalization and liberalization of economies; crumbling barriers to international trade and free movement of capital due to the establishment of World Trade Organization (WTO) and shifts towards market economy in contrast to the control economy or socialist economy. It was believed that market economy will be the ‘mantra’ for all nations, either developing or under developed, to achieve economic salvation. Destiny smiled and brought the belief to its knee and rethinking process started afresh as to what ought to be the new ‘mantra’. Economic downtown indicated further that it is not the big companies, which are only efficient machineries to rotate the economic circle; rather SME’s are the most trusted vehicles that will lead any economy towards salvation.Literature across the globe suggests adoption of sustainable Corporate Governance Norms within the SME sector. On the contrary, there are strong arguments also available against introduction of such norms. In the present study we have considered the feasibility of introduction of corporate governance norms in the sector and attempted to develop, on the basis of the findings, sound and practicable solutions.
The issue of corporate governance has in recent years received more attention than it would ordinarily have in the light of series of corporate failure that gave rise to implications the affect not only those directly connected with the corporations concerned, but also those affected by its existence such as employees, customers, suppliers and the environment. This interest is further aggravated by occurrences of major corporate failures such as the collapse of the BCCI Bank, collapse of the Barings Empire, the Daiwa Bank debacle and the Maxwell affair which all have pointed to the lack of a proper corporate governance system as a major course. Studies have shown that a majority of corporate failures were predominantly dominated by one individual, occupying a position of trust, who apart from losing large amounts of money also committed illegal acts.
This paper presents a carbon-accounting method commonly use by practionaries, the form of carbon
valuation in the light of real option methodology and how to post the carbon credits into the
accounting system will be study as well. The lack of consistency to measure the carbon inventory in
the atmosphere and even the definition as intangible asset are address in this paper too. As
conclusion is notaries that there is no consensus related carbon credits between academics and
practionaries, the necessity of accurate measure and how much certain carbon project is the fact
mitigating the GHG from atmosphere are explore in this study too.
Purpose - This paper aims to analyze whether the corporate governance attributes such as board leadership structure, audit committee meetings held, size of independent non-executive directors and size of non-executive directors have significant impact on audit quality of manufacturing companies listed on Colombo Stock Exchange, Sri Lanka during 2011 to 2013.
Research Design – The study takes 32 manufacturing companies listed in Sri Lanka out of 36 as sample and employs binary logistic regression method for modeling the association between a binary dependent variable such as audit quality and multiple independent variables such as board leadership structure, audit committee meetings held, size of independent non-executive directors, and size of non-executive directors.
Findings – The study finds the logistic regression model for overall evaluation, statistical tests of individual predictors and goodness-of-fit. As per the output, Hosmer and Lemeshow test reveals the model for goodness of fit with chi-square of 17.503 and with probability value of 0.008, which is significant at five percent levels. Cox & Snell R Square reveal 56.2 % of the variance in audit quality. Whereas board leadership structure and audit committee meetings held have significant relationship with audit quality, size of non-executive directors and size of independent non-executive directors have shown insignificant association.
Research Limitation – As sample size is relatively small, there may be a challenge to generalize the results of this study widely.
Originality– This research contributes to the literature by adding the significant association between some corporate governance variables and audit quality. The findings from this research could be generalized to the companies similar to this category.
In the recent years, Egypt has committed itself to reform corporate governance, this was urged to increase investors’ confidence in the Egyptian business environment and accordingly attract more foreign investment. So far many developments have taken place regarding corporate governance reform but still many challenges do exist. This paper offers an analytical account of evolution of corporate governance in Egypt, and identifies the main deriving forces of this reform and the challenges ahead. Overall, this paper contributes to literature on international corporate governance, and offers policy makers the understanding that can better guide corporate governance reform in the future.
The purpose of this study is to present a case for the need for audit committee in Constituency Development Fund to promote corporate governance and accountability in constituency development fund management in Nairobi Province, Kenya. The study provides an analysis and critique of the extent of engagement research in the field of corporate governance and accountability in constituency Development Fund management and present case for further research that may be directed to outside Nairobi province. The study found that the extent of literature in the field of corporate governance and accountability and reporting in contrast to the field to management CDF in Nairobi had largely ignored the practice within CDF organizations. The study argues that CDF can benefit from the methodological and theoretical insights of audit committee and other disciplines. The study suggests where further contributions might be made by future research endeavors engaging with audit committees with organizations. Engaging audit committee in CDF governance and accountability has the potential to improve theorizing practice and the sustainability performance with organizations. Drawing on the methods and theories of other disciplines and the papers in the special issues (of audit committee) the study presents away forward for researchers engaging with audit committees in organizational practicing corporate governance and accountability.
Les mécanismes de la gouvernance s'appuient sur divers systèmes tels que les conseils d'administration, les systèmes organisationnels et les systèmes stratégiques. L'un de ces systèmes stratégiques est la veille stratégique, définie comme un processus informationnel par lequel une organisation se met à l'écoute de son environnement pour décider et agir dans la poursuite de ses objectifs. L'objectif de la communication est de présenter la veille stratégique comme une pratique de gestion utile au pilotage des organisations et permettant d'améliorer leur gouvernance, de décrire ses composantes (veille technologique, la veille concurrentielle, la veille commerciale et la veille sociétale) et de proposer des gestes concrets aux dirigeants pour tirer partie de cet outil.
The effects of a breakdown in the principal / agent relationship in the Nigerian financial services industry especially in the banking sector, cannot be over-emphasised. The required alert is due to the fact that this type of industry requires that there must be trust between the principal and the agent who is making decisions on behalf of the principal's financial investment in the business environment. This paper analyses the agency problem that surfaced in the Nigerian banking sector, following the recapitalization exercise that took place in the industry in 2006. the study found that to a large extent, the breakdown in the corporate governance code was a major cause of the crisis. The paper also examines the various ways the regulatory agencies responded to the problem and the measures that are being instituted to forestall a re-occurrence.
Spectacular corporate failures including One Tel, Ansett, HIH, Enron and Worldcom and the recent fiasco with National Australia Bank are evidence of a legitimacy crisis in current corporate governance practices. This paper analyses the organisational impact of recent “best practice” guidelines and the recommendations for reform. We conclude that substantive concerns still exist and it is likely that companies will utilise a “tick the box” approach emphasising form over substance governance changes. We argue for a two-fold approach to embed effective ongoing reform. The first involves cultural change(s) at the boardroom level to develop a “real” team approach. This would embrace the use of constructive conflict in the decision-making process and also incorporate elements of trust and openness. Constructive conflict, we argue, leads to real and effective boardroom behavioural changes.
The second strand of reform proposes that such changes should be extended into the internal decision-making (enterprise governance) arena. Such a move towards organisational pluralism devolves decision-making and allows greater employee involvement in the “running” of organisations. It also entails a significant re-framing of organisational values, culture and followership. The leadership role becomes one of facilitation and support not the current dominant “command and control” mindset.
After the Asian crisis and resulting insolvency in the banking and corporate sectors, the quest for improvement of corporate governance, as a pre-requisite for better performance, has become an increasingly important issue in Thailand. Previous studies investigating the relationship between corporate governance and performance have largely ignored the impact of this critical factor on the functional level and its effect on the overall performance of organizations. Based on a cross- industry survey of 112 Thai listed companies, it was found that good corporate governance practices have a positive impact on performance improvement at the functional level of organizations and ultimately contribute to organizational performance. ABSTRACT FROM AUTHOR Copyright of Asia Pacific Business Review is the property of Routledge and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts)
This study examines whether Shari’ah approved companies with majority Muslim directors adopt better corporate governance (CG) than non-Shari’ah approved companies with majority non-Muslim directors and whether the performance of the former is better than that of the latter. The objective of this study is to determine whether religious factor has an influence in adopting corporate governance mechanisms and in performance. Performance of the companies is measured in relation to three perspectives, namely, Shari’ah compliance, environmental performance, and social performance. This study used secondary data and the leading 50 firms were selected from each group based on their market capitalization for the year 2002. The proxies for good corporate governance are CEO non-duality, the proportion of non-executive directors on the board, and the proportion of independent non-executive directors on the board. The proxies used to measure Shari’ah compliance are the ratio of prohibited income to total income and the ratio of prohibited expenses to total expenses. The variables used to measure the environmental and social performance are certification of ISO 14001 and OHsas 18001, respectively. The results generally showed that there is little significant difference between the CG and performance of Shari’ah approved companies with majority Muslim directors and non-Shari’ah approved companies with majority non-Muslim directors, although the former is marginally better for both, in a few instances.
Purpose – To review the world's and Australia's notable firm failures associated with divergence of best practices, describing the link of how corporate sustainability depends on its corporate governance implementation. Design/methodology/approach – An array of existing theories and prior academic findings on corporate governance and corporate sustainability published between 1998 and 2004 are compared and contrasted, fitted with empirical evidence of what had happened with Enron, Inc. (Enron) and HIH Insurance (HIH). Matrices are developed to intercept the key good corporate governance perspectives with the study propositions. Findings – The study indicates that both Enron and HIH acknowledged good corporate governance as a prevailing framework, yet failed to implement it. Each of the principles had been violated and had served as an attribute to the firms’ failure. Research limitations/implications – This study is limited to the two notable cases, notwithstanding the implication that perhaps its applicability in other corporate settings may be pursued. Data and information sources for this paper have also been limited to the use of secondary data obtained from the public domain. Practical implications – This paper is expected to fill part of a gap in linking the studies of how corporate sustainability depends on its corporate governance. Originality/value – This paper provides a practical approach in identifying the existence or non-existence of key good corporate governance principles in the going-concern of corporations.
Here is explored corporate governance role in privatised water companies in emerging economies. Private parts contracts are periodically renegotiated due to externalities and information asymmetries. In this context, governance mechanisms are of critical importance as illustrated in the case study of the city of Buenos Aires where water services privatised in 1993 were re-nationalised in 2006. The failure is traced to regulations, including the regulatory control body, coupled with the company's reluctance of having transparent and open governance mechanisms. The failure is linked with fuzzy and weak corporate governance, a common problem in emerging economies eager to attract private investors.
Market regulators, commissions and accountancy bodies have recommended the establishment of audit committees as an important step in improving corporate governance. In 2002, the Kenya Capital Markets Authority required all listed companies to establish audit committees. This study examined: 1) the practices of audit committees in Kenyan listed companies; 2) how audit committees relate to other stakeholders; 3) the major achievements and challenges facing audit committees in Kenya. A questionnaire survey completed by 29 companies (60%) showed that audit committees in Kenya are more independent than audit committees of other developing countries of Africa. All the audit committees reported cordial relationships with the management, internal audit and the external auditors, and were perceived to have improved the quality of financial reporting. The findings have some implications on the Kenyan capital market as companies may now be able to attract more foreign investors.
This article is a part of a literature review of a broader doctoral dissertation research on corporate goals in comparative corporate systems. It represents a comparative review of ownership structure, board of directors structure and firms' goals in companies registered as British, German, and EU's, based on recent empirical researches. A main goal of this work is to summarise main ideas that emerged in this relatively new area of research over the last decade, offering a starting point for further research question development, in general, and a base for meaningfull corporate policy design in former communist/socialist countries, in particular. There are no sufficient evidences to claim that different corporate systems converge, so far.
This work reviews moral, philosophical and theoretical foundations of corporate goals i.e. the normative aspects of the issue. In the focus of this aspect are various interpretations of firm's aims (its justifiable goals) in different social environments, along with establishment of moral and philosophical guidelines for firm governance. In addition, there is an overview of theoretical considerations of corporate ownership and control – whose corporations are, what are their aims and who manage them.
Over recent times there has been significant interest in corporate governance by the popular press, regulators and academics after strings of spectacular corporate failures. Governance research, however, appears to have been contextually-bound, focussing mainly on organisations with freely traded shares. The governance of co-operatives, despite their significance to the world and New Zealand economies, has received scant research focus. The New Zealand dairy industry, which is dominated by co-operatives, contributes 25 percent of exports and ten percent of GDP to the local economy, yet there appears little understanding and empirical research of co-operative governance. Reviews of the managerial corporate governance and co-operative literatures also suggest there is currently no all-encompassing theory of the governance of co-operatives. Given these gaps in the literature, the aim of this research is to inductively develop a theory of the roles of governing boards of New Zealand and Australian co-operative dairy companies from the perspective of the participants. In order to achieve this aim, a case study method inspired by Eisenhardt (1989a) is selected to guide the research. Fieldwork utilising semi-structured interviews with governance participants from six co-operative cases is used to gather a broad and deep picture of co-operative board roles. By analysing data within case and comparing across cases, the understandings from the empirical data provide the basis to develop the theoretical model. Drawing from these understandings, this study will look at board member roles in terms of their activities and the process in which they engage. This research results in a theoretical model deeply informed from practitioners' views to provide a unified theory of governance. Upon theoretical saturation five unique theoretical concepts and relationships between them emerge from the analysis with an intimate link to the empirical data: Exogenous-Issues, Supplier-Shareholder-Needs/Benefits, Supplier-Shareholder-Controls, Board Architecture and Board Roles. Subconcepts within the Board Architecture concept are: Individual-Distinctions, Engagement-Forums, and Dynamics. Four Board Role concepts emerge Unite, Strategic-Involvement, Control and Serve. The resultant model of co-operative board roles presents new insights, is logically coherent, has a good fit with the data and is reasonably parsimonious. A contribution to knowledge of corporate governance and agricultural co-operatives is achieved through an integrative and nuanced understanding of co-operative board roles. The findings also highlight individual director contributions to the role; a unique addition to governance studies. The model also begins to highlight the relationships between key actors and the processes used in decision making. The theoretical model's similarities to and divergences from existing theories of corporate governance are drawn to illustrate the contribution of the model. This thesis provides researchers, practitioners, educators, regulators and policy makers in the corporate governance and agricultural co-operative fields, insights into the current and ongoing roles of co-operative boards. The theoretical model establishes foundations for further study into how directors can more effectively govern their co-operatives.
Corporate governance has come to be recognised as a cornerstone of economic reforms seeking to promote stability and growth in developing countries. The Asian crisis of the 1997 was viewed as having roots in poor governance and hence national governments as well as international organisations have sought to promote a strengthening of governance mechanisms. This article investigates governance reforms in India over the last decade. The paper reviews changes in Indian governance codes that indicate a preference of adoption of Anglo-American governance models. A survey of ownership structures of Indian listed companies reveals a mixture of governance mechanisms and a persistence of the ''business house model'' of governance. The paper concludes that despite external pressures towards an ''Anglo-Americanisation'' of governance practice, the outcomes thus far reveal the emergence of a diversity of governance mechanisms arising in a path-dependent fashion.
Corporate Governance - Responsibilites, Risks and Remuneration
- K Keasety
- M Wright