It is an acknowledged fact that the principal-agent theory is generally considered the starting point for any debate on the issue of corporate governance emanating from the classical thesis on The Modem Corporation and Private Property by (Heracleous, 2001). According to this thesis, the fundamental agency problem in modem firms is primarily due to the separation between shareholders and management. Modem firms are seen to suffer from separation of ownership and control and therefore are run by professional
Enron Corporation, WorldCom incorporated failure and a good number of other corporate financial scandals, issues of corporate governance became the focus of public discussion, as poor governance practice was identified as a major contributor to most of the failures. Furthermore, the tragic event of the Russian financial scandal and Asian financial crisis brought global attention to the crucial roles of good corporate governance practice in ensuring soundness of financial services and financial sector
According to board structure, the difference of corporate governance among different countries is may be unitary or dual board on the country. In the UK and the USA, a unitary board of directors in the form of board structure, characterized by one single board comprising executive and non-executive directors. (Aguilera, 2003) It is responsible for all aspects of the activities of the corporation. A dual board of directors is including a supervisory board and executive board of management. Nevertheless
objectives, the setting of corporate governance and the division of responsibilities and duties. The aim of control is to reduce the corporate governance risk which result from the strategic decision making risk. The business control is the basis of these three controls, and the control object and content is the specific business or events in the process of the implementation of strategy, the control purpose is to reduce the risk of operation or reduce affect
concerning the role and functions of regulators and the need for improved disclosure and good corporate governance. Meanwhile there were many public listed companies adopted relatively high-levels of corporate abuse and in some cases breakdown, attributable in part of effective corporate governance structures. Poor financial management of directors and related party transaction are one of the corporate abuse that existed. This problems got more worst by ineffectual enforcement, difficulties concerning
A brief definition of corporate governance, business ethics, auditing profession, stakeholders and the auditing committee would bring light to the discussion at hand. Corporate governance in terms of a South African definitions stated by (Reinecke& Albertus, 1996). (1996:21) “the way in which companies are directed and controlled”. Business ethics is defined as items of Richard T. De George (2015) “in this broad sense ethics in business is simply an application of everyday moral or ethical norms
independent director concept emanate from the agency cost theory that relates primarily to the manager-shareholder agency problem. Acknowledgement of the majority-minority agency problem in the literature is sparse because academics were not confronted with the issue at all as they were primarily dealing with outsider systems of corporate governance. Emergence of Independent Directors in U.S. Corporate Practice Apart from repeated allusions in theory to the concept of independent directors as an answer
Chapter 1 Introduction and Background (680words) 1.1 Introduction Corporate governance involves the protocols through which corporations get organized, directed and controlled . Therefore, it is important for the corporations to have structures that have members of the corporate governing body that are results oriented . In addition to this, study has suggested that proper corporate governance reduces chances of organizational problems . In the light of this, the problems range from mismanagement
actions and goals of managers often referred to as information asymmetry . The relationship between the shareholder and the manager is a delicate one and the possibility of conflict between the two has lead to the focus on corporate governance. Shareholder Model of Corporate
output. This writing is a personal reflection stating my meaning of governance explained by the first-hand encounter including risks associated with it and my social responsibility towards it. “Governance can be generally defined as the means by which an activity or ensemble of activities is controlled or directed, such that it delivers an acceptable range of outcomes according to some established standard” (Hirst, P, 2000). Governance consists of rules and practices associated with those rules, set