The Globalisation of Corporate Governance: External and Internal Mechanisms of Control

2003 ◽  
Vol 14 (2) ◽  
pp. 125-137 ◽  
Author(s):  
Ronald Dore
Keyword(s):  
Corporate Governance ◽  
Internal Control ◽  
Good Governance ◽  
Internal Controls ◽  
One Dimension ◽  
Control Mechanisms ◽  
National Cultures ◽  
Governance Systems ◽  
Employment Systems ◽  
The One

Much of the literature on corporate governance assumes that there is one universally valid prescription for good governance—or at most assumes a single choice between pro-shareholder and pro-stakeholder prescriptions. It is, however, not only “who gets what” outcomes which have to be taken into account in choosing governance systems, but also different preconditions for effectiveness, affected by national cultures and employment systems. One dimension of variation is, the relative need for, and efficacy of, externally imposed disciplines on management on the one hand, and the internal controls of conscience and peer pressures on the other. Internal control mechanisms seem to work in community-like firms such as those of Japan. Will China turn out to have similar possibilities?

Governance Practices and CEO Hubris

2021 ◽  
pp. 161-182
Author(s):  
Paola Ferretti ◽  
Cristina Gonnella
Keyword(s):  
Decision Making ◽  
Corporate Governance ◽  
Internal Control ◽  
Financial Distress ◽  
Good Governance ◽  
Power Dynamics ◽  
Control Mechanisms ◽  
Managerial Entrenchment ◽  
Governance Practices

This chapter analyzes the connection between CEO hubris and corporate governance contingencies, including a case study of an Italian bank for which the state of financial distress shall be linkable also to bad governance. The main objective is to verify whether, in presence of hubristic CEO, the internal control mechanisms, set to ensure the board vigilance and limit the overconfidence of the leader, are implemented, and if so, whether such mechanisms, even when formally respected, may be not so appropriate to guarantee a good governance. Particularly, the existence of a CEO hubris could neutralize their positive expected balancing effects on the power dynamics between CEO and board, such as to give prevalence to substance over form. Therefore, it may occur that some governance mechanisms (e.g., independence, non-duality), even if formally implemented, are unable to stem the managerial entrenchment of the CEO, who succeeds in enhancing immoderately his substantial power in the decision-making process.

The Role of Internal Controls in Corporate Governance Systems

2019 ◽  
pp. 260-274
Author(s):  
Ibrahim Oba
Keyword(s):  
United States ◽  
Corporate Governance ◽  
Significant Role ◽  
Internal Control ◽  
The United States ◽  
Internal Controls ◽  
Governance Systems ◽  
Interest In Research ◽  
Corporate Government

The recent scandals and corporate failures in the United States and in Europe have led to a renewed interest in research of corporate governance. The objective of this chapter was to explore the role of internal control in enhancing the corporate governance and supervise the functionality of the implementation of the corporate government principles. The results show that the internal control has a significant role in enhancing the corporate governance pillars in companies, and the successes of corporate governance requires compliance with all elements of internal control.

Board structure changes after accounting fraud: the case of Schneider Electric

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Benedicte Millet-Reyes ◽  
Nancy Uddin
Keyword(s):  
Corporate Governance ◽  
Internal Control ◽  
Multinational Corporation ◽  
Business Case ◽  
Annual Reports ◽  
Board Structure ◽  
Control Mechanisms ◽  
Accounting Fraud ◽  
Content Type ◽  
The Impact

Theoretical basis The impact of corporate governance on internal controls and quality of financial disclosures. Research methodology Analysis of a real financial fraud event for a non-US multinational corporation. The case relies on accessing and analyzing annual reports for the firm, both before and after the fraud. Additional information on industry governance characteristics are provided in the case itself so that students can compare the firm to the industry. Case overview/synopsis This business case is centered on the analysis of Schneider Electric, a French multinational corporation, which had to restate their financial statements in 2011 because of accounting fraud. Following this event, Schneider undertook major changes in their board structure to improve internal control mechanisms. This pedagogical business case familiarizes students with international differences in ownership and board structure and emphasizes potential corporate governance changes after financial statement fraud. Complexity academic level Managerial finance, corporate finance, international finance, auditing. This case is more appropriate for upper-level undergraduate and graduate courses.

Transforming Corporate Governance

Paradigm ◽  
1998 ◽  
Vol 1 (2) ◽  
pp. 10-13
Author(s):  
Mrityunjay Athreya
Keyword(s):  
Corporate Governance ◽  
Good Governance ◽  
The Other ◽  
Step Process ◽  
Business Values ◽  
Professional Managers ◽  
The One

With the increasing liberalization and globalization of all economies, there is a worldwide recognition of higher freedom and role for corporations and managers, on the one hand, and consequently, the need for better governance, on the other. In this paper, we shall look at a three-step process for transforming corporate governance: 1. Laws for minimum good governance. 2. Competent entrepreneurs, professional managers and their dedicated leadership for better governance. 3. Business values and ethics for superior governance.

scholarly journals Corporate governance, external audit and the audit process

2009 ◽  
Vol 6 (4) ◽  
pp. 309-316
Author(s):  
Hashanah Ismail
Keyword(s):  
Corporate Governance ◽  
Internal Control ◽  
Good Governance ◽  
Audit Committees ◽  
Control Environment ◽  
Audit Process ◽  
External Audit ◽  
Audit Risk ◽  
Risk Framework ◽  
Governance Practice

This paper reports on interviews with audit partners of listed companies on their perspectives of impact of corporate governance on the audit process. Based on responses received the study finds that audit risk framework is dynamic enough to incorporate expected changes in control environment brought about by greater consciousness on the part of directors on the need for good internal control. However there is still skepticism that good governance practice has filtered through clients’ control environment as auditors believe dominant CEO’s may still moderate the effectiveness of audit committees

scholarly journals Corporate municipal governance for effective and efficient public service delivery in South Africa

2014 ◽  
Vol 3 (4) ◽  
pp. 98-106 ◽  
Author(s):  
Paulin Mbecke
Keyword(s):  
South Africa ◽  
Corporate Governance ◽  
Service Delivery ◽  
Local Governments ◽  
Good Governance ◽  
Governance System ◽  
Municipal Governance ◽  
Governance Systems ◽  
Set Up ◽  
Code Of Corporate Governance

This research acknowledges the current service delivery chaos manifested through numerous protests justifying the weakness of the “Batho Pele” good governance principles to facilitate, improve and sustain service delivery by local governments. The success of corporate governance in corporate companies and state owned enterprises is recognised prompting suggestions that local governments should too adopt corporate governance principles or King III to be effective. The research reviews the King III and literature to ascertain the lack of research on corporate governance in local governments in South Africa. Considering the particular set-up of local governments, the research doubts the successful application of King III in local governments. Through critical research theory, the current service delivery crisis in local governments in South Africa is described. The success of corporate governance systems in the United Kingdom and Australian local governments justify the need for a separate corporate municipal governance system as a solution to the crisis. A specific change of legislation and corporate governance guidelines is necessary to address the uniqueness of local governments. Hence, corporate municipal governance should be compulsory and based on ten standardised good governance principles via a code of corporate governance and a corporate governance framework responding to specific prerequisites for success

scholarly journals Corporate governance and financial markets

2016 ◽  
Vol 5 (3) ◽  
pp. 263-278 ◽  
Author(s):  
Avanidhar Subrahmanyam
Keyword(s):  
Corporate Governance ◽  
Stock Returns ◽  
Good Governance ◽  
Trading Activity ◽  
Cross Sectional ◽  
Institutional Holdings ◽  
Liquidity Trading ◽  
The One ◽  
Sectional Analysis

We link corporate governance with liquidity, trading activity, and the clientele that holds the firm’s stock. On the one hand high liquidity can decrease the quality of a firm’s governance because it reduces costs of turning over a stock attracting too many short-term agents who have little vested in good governance. On the other hand, liquidity can attract more sophisticated agents and hence improve the quality of a firm’s governance. In our cross-sectional analysis, we find that high liquidity is accompanied by poorer governance and vice versa. Further, increased institutional holdings are surprisingly associated with weaker governance in the 1990s, whereas in later years, they are not significantly related to governance. The proportion of orders transacted by small (large) traders is associated with weaker (stronger) governance, supporting the notion that a clientele consisting of small, unsophisticated investors can weaken the discipline imposed by outside investors on management. Given the known relation between corporate governance and stock returns, our results establish an indirect link between security prices and liquidity as well as trading activity, which goes beyond the direct channel described in Amihud and Mendelson (1986)

The Effects of Corporate Governance on CEO Compensation

2019 ◽  
Vol 27 (2) ◽  
pp. 165-191
Author(s):  
Myoung Gi Lee ◽  
Jin San Kim
Keyword(s):  
Corporate Governance ◽  
Executive Compensation ◽  
Internal Control ◽  
Labor Union ◽  
Market Competition ◽  
Poor Performance ◽  
Control Mechanisms ◽  
Governance Mechanisms ◽  
Top Executives ◽  
Corporate Governance Mechanisms

The purpose of this study is to find the effects of corporate governance on executive compensation using the sample of Korean manufacturing firms listed on the Korea Exchange (KRX) from 2005 to 2012. In order to do that, this study extends empirical models of Core et al. (1999), Fahlenbrach (2009), Giroud and Mueller (2011), and finds the following results. First, internal corporate governance negatively affects executive compensation, implying that a good corporate governance can prevent outrageous compensation to top executives with poor performance. On the other hand, the interactions between internal and external corporate governance mechanisms have mixed results. While the first interaction has little impact on executive compensation, the second interaction among three different mechanisms has a positive and statistically significant impact. These results imply that while internal corporate governance and product market competition works against executive compensation, labor union may be in the same boat with managers in terms of compensation. Unlike most previous studies based on one-dimensional approach, this study investigates interactions among various corporate governance mechanisms. Overall results have a few important economic and social implications. Because internal corporate governance works as an effective mechanism, policymakers should find ways to make internal control mechanisms as independent as possible.

The Application of The Corporate Governance In Management of Islamic Banks

2020 ◽  
Vol 8 (8) ◽  
pp. 123-137
Author(s):  
Al Siddig Talha M. Rahma ◽  
Durria Hyder Siddeg Musa
Keyword(s):  
Corporate Governance ◽  
Internal Control ◽  
Boards Of Directors ◽  
Internal Controls ◽  
Management Control ◽  
Risk Governance ◽  
Accounting System ◽  
Islamic Banks ◽  
Shariah Governance ◽  
Transparency And Disclosure

One of the most issues noticed by researchers and suggested from investors is Corporate Governance, addressing the need for company management control, dividing economical unit from its ownership and improving the performance of the board of managers, auditors, accounting system, internal control, and finally maintaining investors and stakeholders' rights. Using better managers in companies results in improvement of their performance.              So the purpose  of this paper comes to examine the determinants of the Islamic bank's product and services disclosure strengths and weaknesses of corporate governance.  , and suggest ways in which can be improved, the results reported across perspective and levels of analyses through, global, regional, legal systems, regularity quality and bank size. The results indicate that the strongest theme of corporate governance for Islamic banks in the sample is Transparency and Disclosure, followed by Internal Controls and External Audit. At the other extreme, the weakest corporate governance theme is Risk Governance, followed by Shariah Governance and the Boards of Directors     . 

scholarly journals Governing Banks: A British Perspective

2011 ◽  
Author(s):  
Andy Milllneux
Keyword(s):  
Corporate Governance ◽  
Financial Crisis ◽  
Global Financial Crisis ◽  
Risk Control ◽  
Control Mechanisms ◽  
Governance Systems ◽  
Conceptual Paper ◽  
British Perspective ◽  
The Global Financial Crisis ◽  
The Uk

This conceptual paper considers the corporate governance of shareholder owned deposit taking banks in light of the Global Financial Crisis (GFC). Deposit taking banks present a special corporate governance problem because depositors (and taxpayers) are stakeholders. The GFC revealed significant weaknesses in the regulation and corporate governance of banks. The UK government commissioned the Walker Review of the corporate governance of UK banks in February 2009. Its recommendations are discussed in the context of the wider governance (including regulation) of banks. Regulation and corporate governance systems should focus on the establishment of effective internal risk control mechanisms and the good management of banks.  

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