"Corporate governance is neither regional nor parochial in nature. It is of global provenance. Comment on these statements."

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Corporate Governance & Business Ethics

Student Number: 011072605

Module: EC32810

Lecturer: Dr Lynn Lim

Deadline: Monday, 18th April, 2005

Handed In: Monday, 18th April, 2005

Word Limit: 1,500

Word Count: 1458 excluding Bibliography


“Corporate governance is neither regional nor parochial in nature. It is of global provenance. Comment on these statements.”

Executive Summary

        Firstly, I will take a look into the situation of corporate governance, and to then see its effect on a global scale to justify, or falsify, the statement that “corporate governance is neither regional nor parochial in nature. It is of global provenance.” To do this I will use various resources, including lecture notes, textbooks, Internet websites, and online journals, not to mention case studies, to define what corporate governance is and to then analyse its placing on a global or national scale. Only then will I be in a position to fully discuss the topic, and title, raised.

Main Content and Discussion

Corporate governance is indeed a world-wide phenomenon, not simply a national or regional idea. It dictates the way in which companies are run throughout the world, having says in the control of companies. It is the way in which Corporate Boards and officers decided to handle the affairs of their corporations, being defined by Sir Adrian Cadbury in 1992 as “the system by which organisations are directed and controlled”. Originally, the main focus of corporate governance was shareholders, although now stakeholders are becoming more of a priority. The difference between a stakeholder and a shareholder is that stakeholders are anyone with an interest in a company, such as employees, as well as the shareholders. Due to this, corporate governance is concerned with:

  1. Effectiveness and efficiency of operations
  2. Reliability of financial reporting
  3. Compliance with laws and regulations
  4. Safeguarding of assets

The need for corporate governance is down to numerous reasons, such as

making the facts and figures of a firm, and also a business environment, available for everyone involved to see, not just investors. This allows people to get the full idea of the financial state of the company, whether it is in a financial state of disaster or in the midst of an all-time high. The effects of poor governance in a situation like this, due to the current technological environment, i.e. the Internet revolution, can be instantly turned into local, national, and global news.  With corporate governance it is vital to understand, and comply with, various Codes of Conduct and Government Regulations. Annual reports are released in order to show compliance with these. In previous years there have been some big name companies that have lost face due to not meeting the required regulations. These include, in the UK, Polly Peck, BCCI, and the Maxwell group, in the US there was Xerox, and in Japan there was the Daiwa Bank.

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        There have also been a number of business failures in recent times. Major companies have suffered major setbacks, companies such as WorldCom, Enron, One-Tel (Aus), and Barings Bank. Many of these failings have been down to corporate greed and the negative involvement of senior managers and directors. In order to successful, on both a national and international level, a firm needs to have a strong governance structure. The governance structure of a typical global company would be similar to:

  • Executive Directors
  • Non-executive Directors
  • Board Committees
  • Senior Management
  • Internal Auditing
  • External Auditing
  • Shareholders

As well ...

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