scholarly journals Corporate management: Ownership, control and shareholders' rights

2005 ◽  
Vol 48 (3-4) ◽  
pp. 211-229
Author(s):  
Marija Djordjevic
Keyword(s):  
Corporate Governance ◽  
Stock Market ◽  
Internal Control ◽  
Supervisory Board ◽  
External Control ◽  
Shareholder Rights ◽  
Concentrated Ownership ◽  
Tier System ◽  
Dispersed Ownership ◽  
Ownership Control

In spite of extent of economy development in one country, every corporation faces up with same problems connected with corporate governance. Problems are ownership, shareholders rights and control. The way to acquire ownership is by buying shares of company. Ownership is connected with making essential decisions in corporation like changing statute of firm, allowing new stock market flotation, etc. There are two types of ownership: widespread or dispersed ownership and concentrated ownership. Dispersed ownership is characteristic of Anglo-Saxon countries (United Kingdom and United States) where one-tier system is representative model of corporate governance. Dispersed ownership means that every single packet of shares is smaller than 20% of total shares in corporation. On the other hand concentrated ownership characterizes presence of ultimate owner(s) in company. Ultimate owner is person who holds more than 20% of shares in firm. If shareholder holds more than 50% of shares he is major shareholder what means that he has control over company. Concentrated ownership is characteristic of continental Europe and Japan where is presented two-tier model of corporate governance. Law and other institutional rules, like rules for listed companies of stock market, must guarantee the shareholder rights. Today, every country accepts Principles of Corporate Governance published by the Organization for Economic Cooperation and Development. Further more, the transitional countries, as Russia, must pass and respect laws, which protect shareholders rights. Control of management is one of the ways to protect shareholder rights. Control could be internal and external. Audit or Supervisory board is main part of internal control. Independent external auditor who is in relation with company does external control by contract of giving services. It is important that all auditors (internal of external) be independent of management of corporations. In this paper, we try to adduce main problems of modern corporate governance as ownership control and shareholders rights.

An Examination of the Principles of Corporate Governance from an Islamic Perspective: Evidence from Pakistan

2011 ◽  
Vol 25 (1) ◽  
pp. 27-50 ◽  
Author(s):  
Aysha Shafat Ahmed
Keyword(s):  
Corporate Governance ◽  
Internal Control ◽  
Islamic Law ◽  
Supervisory Board ◽  
External Control ◽  
Control Mechanisms ◽  
Islamic Perspective ◽  
Finance Industry ◽  
Theoretical Approaches ◽  
The Subject

AbstractThis article attempts and establishes a positive and direct link between Islamic law and the principles of corporate governance, using practical examples from the banking and finance industry. Several theoretical approaches are implemented to analyse the subject of corporate governance. Commentators have previously linked theories to explain the elements of corporate governance and its essential principles, ranging from board activities to internal control mechanisms such as auditing. Once proven that there is a link, this research attempts to analyse how well or how this Islamic approach to corporate governance is enriched within organisations based in Pakistan. However, at the same time, despite the Islamic element involving accountability to God and individual responsibilities under Islam as a religion, one finds immense similarities to the types of internal and external control mechanisms. There is a similarity in the way an Islamic organisation is counselled by the Shariah Supervisory Board just as a conventional Board would perform their actions. Similar problems are associated in organisations implementing Islamic principles of corporate governance. The main difference unearthed by this research is the element of religious beliefs. Pakistan as a country exemplifies how the development of corporate governance code is more inclined towards the Anglo-Saxon model than towards the Islamic perspective, despite a strong Islamic law background. However, this does not mean that one perspective is better than the other. It just illustrates the flexibility of the subject of corporate governance and its principles. The task to choose the type of principles to adhere to is entirely up to the region, culture, and the corporate structure.

scholarly journals Responsibility and role of internal and external statutory auditors in extraordinary operations

2018 ◽  
Vol 15 (3) ◽  
pp. 66-79 ◽  
Author(s):  
Maurizio Rija
Keyword(s):  
Internal Control ◽  
Supervisory Board ◽  
External Control ◽  
Critical Periods ◽  
Commercial Law ◽  
Civil Responsibility ◽  
History Of ◽  
The Law ◽  
Accounting Control ◽  
Work Done

In the current work, the figures and functions of the external statutory auditor and internal statutory auditor are analysed. Before examining this subject, the historical and critical periods which have characterized the history of the subjects concerned is recalled; from the beginning will be shown the historical and regulatory process of auditing rules (activities engaged in by these subjects). From the dedicated and practical study of several documents, it is shown that with the progress of time, internal control carried out by the supervisory board is supported by an external control by the auditors or an audit firm. Until the mid-70s, auditing control was voluntary and the companies, without any impositions, believed it preferable to remain anchored to a purely internal control rather than an audit company. The law 136/1975 which made the external accounting control by an auditing company compulsory is under control of the Consob and the Draghi law clearly distinguishes the roles carried out by the auditors and work done by the supervisory board. After alluding to the reform of the commercial law, which took place in 2003, the law 39/2010 is analysed, modified by the recent law 135/2016. Successively, civil, criminal and administrative responsibility of the external and internal statutory auditors are analysed since with the EU Recommendation of 2008 (2008/473/EC) the state members are encouraged to limit the civil responsibility making the auditors no longer unlimitedly and jointly responsible but responsible relatively to the damage caused in the first person. Finally, in a comparative context, a study is carried out on the effects of the recommendation in other European countries pointing out any dissimilarities/similarities from both the criminal and administrative aspect.

scholarly journals Islamic Corporate Governance and Internal Control Influance on Fraud in Sharia Commercial Banks

2020 ◽  
Vol 1 (1) ◽  
pp. 28
Author(s):  
Mariyam Chairunisa
Keyword(s):  
Corporate Governance ◽  
Internal Control ◽  
Financial Services ◽  
Commercial Banks ◽  
Audit Committee ◽  
Supervisory Board ◽  
Negative Effect ◽  
Descriptive Approach ◽  
Quantitative Descriptive ◽  
Positive Effect

This study aims to examine impact of Islamic Corporate Governance and Internal Control on Fraud on sharia Commercial Bank in Indonesia. The unit analysis of this research is Sharia Commercial Banks in Indonesia which have been registered in the Financial Services Authority (OJK) period 2012 to 2017. This research was done to 11 Islamic commercial banks by using quantitative-descriptive approach. The results of this research showed that Sharia Supervisory Board and Internal Control have negative effect and unsignificant  on Fraud. However, Audit Committee has a positive effect and significant on fraud .

The German Supervisory Board on its Way to Professionalism

2010 ◽  
Vol 11 (2) ◽  
pp. 115-158 ◽  
Author(s):  
Jan Lieder
Keyword(s):  
Corporate Governance ◽  
Internal Control ◽  
Supervisory Board ◽  
Decision Making Process ◽  
European Level ◽  
Governance System ◽  
Management Board ◽  
Corporate Governance System ◽  
Flow Of Information ◽  
Board System

The paper shows how the efficiency of the German supervisory board has been significantly improved in the last decade. These legal changes made the supervisory board climb to a higher position of power. In particular, the supervisory board is now significantly involved in the decision-making process on a company's overall strategic concept and on management decisions of fundamental importance. This emphasizes the future-oriented monitoring obligation of the supervisory board, which gained much more importance in the last decade. Furthermore, the new provisions increased the flow of information from the management board to the supervisory board, and they facilitated the monitoring efficiency of every single supervisory board member. In addition, several important changes improved the cooperation of supervisory board and auditors. The most recent changes strengthened the supervisory board's responsibility with regard to internal control and risk management.The vest majority of those changes in the German supervisory board system are very welcome. However, the current regime of German codetermination as well as the excessive size of the supervisory board has to be changed. Under the important developments on the European level, the time has come to act now in this direction. The advocated concept of codetermination by consensus provides a solid basis for more flexibility in the rigid German corporate governance system. It is also desirable to further limit the size of the supervisory board to no more than twelve members. Finally, the efficiency of the corporate governance system would be improved by allowing enterprises to choose between a one-tier and a two-tier board system.

Voting with hands, earnings management and corporate governance

2019 ◽  
Vol 18 (2) ◽  
pp. 178-197
Author(s):  
Ting Li ◽  
Xinlei Zhao ◽  
Aiwu Zhao
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Internal Control ◽  
Univariate Analysis ◽  
Negative Relationship ◽  
Ordinary Least Squares ◽  
External Control ◽  
Substitution Effects ◽  
Content Type ◽  
Shareholder Proposals

Purpose Motivated by managers’ intentions to pursue private interests by engaging in earnings management, this paper aims to investigate whether voting with hands (shareholders cast votes on shareholder proposals) by shareholders acts as an external disciplining mechanism over earnings management relative to corporate governance. Also, as corporate governance can scrutinize managers’ behavior, this study also examines whether there is a substitutive relation between shareholder proposals and corporate governance mechanism. Design/methodology/approach First, this paper uses ordinary least squares (OLS) regressions of discrepancy accruals on the percentage of “For” votes for shareholder proposals to test the incremental effect of shareholder proposals on earnings management. Second, firms receiving shareholder proposals are matched with those not receiving proposals by propensity scores, and the levels of earnings management and corporate governance between these two groups are compared by univariate analysis and OLS regressions. In addition, six portfolios are created based on whether firms receive shareholder proposals, as well as on the levels of corporate governance, to assess whether external control from shareholder proposals can substitute internal control for corporate governance in disciplining earnings management. Regressions of earnings management on corporate governance (shareholder proposals) are conducted in the sub-samples formed on shareholder proposals (corporate governance) to further explore the above substitution effects. Findings Based on a sample of 2,041 firm-year observations from 2001 to 2010, this paper finds that the “For” votes received from the shareholder proposals have a significant negative relationship with the practice of earnings management, even when corporate governance is controlled. The negative relationship between shareholder proposal and magnitude of earnings management is also found to be stronger when firms have weak corporate governance. The overall evidence suggests that the external control from “voting-with-hand” shareholders has a significant impact on earnings management. In addition, shareholder proposals can substitute the monitoring mechanism for corporate governance in constraining managers’ myopic behavior. Originality/value This paper contributes to the extant literature by using the percentage of “For” votes for shareholder proposals as a proxy for shareholder pressure and concerns. This study contributes to the earnings management literature by showing the disciplinary effect of outside shareholders on managers’ reporting behavior. Also, it contributes to the corporate governance research by presenting that shareholder proposals can substitute for the internal control of corporate governance in decreasing earnings management. This paper should be of interest to investors and standard setters.

scholarly journals The Role of Supervisory Board in Corporate Governance in Vietnam: From Legal Regulations to Practice

2021 ◽  
Vol 11 (4) ◽  
pp. 2546-2563
Author(s):  
Dr. Phan Thi Thanh Thuy
Keyword(s):  
Corporate Governance ◽  
Board Of Directors ◽  
Internal Control ◽  
Supervisory Board ◽  
Governance Structure ◽  
Company Law ◽  
The Board Of Directors ◽  
Supervisory Boards ◽  
Control Body

Good corporate governance is always associated with an effective internal control system, which is expected to quickly forecast and detect the infringements of laws and the company's charters committed by the main corporate governance bodies like the board of directors, the general director, and provide timely advice on remedial solutions. Following this theory, since the adoption of the first Vietnamese company law in 1990, the supervisory board, a special body of Vietnamese corporate governance structure, has formed and become a traditionally internal control body in joint-stock companies (JSCs). However, supervisory boards seem not to promote their effectiveness as expected. Many major violations conducted by the board of directors and the CEO took place in large companies, where the supervisory boards did not detect or were complicit in these violations. Most recently, the trend of replacing supervisory boards with independent directors and audit committees has occurred in many public companies in Vietnam. This paradox raises questions about the ineffectiveness of supervisory boards and the reasons causing the situation. To find the answers, the article will focus on analyzing the role of the supervisory board in Vietnamese JSCs compared with international practices. Thereby, to find out the reasons for the limitations of supervisory boards in both legal provision and practice. To conclude the research, the article will make some suggestions for reforming the supervisory board so that this internal control body could bring its effectiveness.

scholarly journals An Analysis Of The Levels And Patterns Of Shareholder Rights: 1990 - 2006

2011 ◽  
Vol 6 (5) ◽  
Author(s):  
Lal C. Chugh ◽  
Joseph W. Meador
Keyword(s):  
Corporate Governance ◽  
Stock Market ◽  
Shareholder Rights ◽  
Optimum Level ◽  
Font Size ◽  
Long Run ◽  
Management Entrenchment ◽  
Median Level ◽  
New Millennium ◽  
Regulatory Reforms

<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="font-family: Times New Roman; font-size: x-small;">Greater attention is being paid to the issue of shareholder rights and corporate governance, particularly since the scandals of 1990s and 2000s and the stock market decline of the new millennium.<span style="mso-spacerun: yes;">&nbsp; </span>This study advances the concept of an optimum level of shareholder rights in corporate governance and analyzes the long-run trends in shareholder rights versus management entrenchment, using the G-Index.<span style="mso-spacerun: yes;">&nbsp; </span>This study finds that the level of shareholder rights generally has not increased, despite the legislative and regulatory reforms of the 2000s and contrary to the general perception.<span style="mso-spacerun: yes;">&nbsp; </span>Rather, shareholder rights have declined amongst the large, S&amp;P 500 companies.<span style="mso-spacerun: yes;">&nbsp; </span>The paper also finds that there has been a tendency on the part of firms to converge to a median-level/norm of shareholder rights.<span style="mso-spacerun: yes;">&nbsp; </span>Evidence further suggests that firms are searching for an optimum level that balances the risks and rewards of greater shareholder rights.</span></p>

scholarly journals Implikasi Tatakelola Islami Terhadap Fraud (Studi Pegawai BPRS di Soloraya)

2020 ◽  
Vol 6 (2) ◽  
pp. 171
Author(s):  
Shofiyyatul Bariyyah ◽  
Devi Narulitasari
Keyword(s):  
Corporate Governance ◽  
Regression Analysis ◽  
Statistical Analysis ◽  
Commercial Bank ◽  
Internal Control ◽  
Financial Services ◽  
Supervisory Board ◽  
Convenience Sampling ◽  
Islamic Values ◽  
Rule Out

This study aims to determine the implementation of Corporate Governance which is based on Islamic values does not rule out the possibility of fraud The Financial Services Authority (OJK) requests a supervisory license for a BPR/BPRS that is approved more than 10 times that of a commercial bank so that higher fraud can occur. Therefore a better supervision is needed from parties within the company to participate in reducing fraud. The sample in this study was 39 employees of the Islamic Rural Bank (BPRS) in Soloraya using convenience sampling and analyzed by statistical analysis using a multiple regression analysis. The results of this study are that the board of commissioners and internal control can reduce fraud, while the independence of the Sharia Supervisory Board (SSB) is not.

scholarly journals Analisis Pengelolaan Perusahaan Daerah Isen Mulang Kota Palangka Raya

2018 ◽  
Vol 4 (1) ◽  
pp. 19-23
Author(s):  
Masrukin Masrukin ◽  
Danang Ristiantoro
Keyword(s):  
Corporate Governance ◽  
Internal Control ◽  
Family System ◽  
Supervisory Board ◽  
Secondary Data ◽  
Primary Data ◽  
Financial Report ◽  
Good Corporate Governance ◽  
Regional Area ◽  
The Board Of Directors

The purpose of this research is to know and describe the management of the District company Isen Mulang City Palangka Raya In this regard with good corporate governance principles. The type of research used in this study is descriptive using a qualified research method. The type of data in this study is primary data and secondary data that includes the board of directors, supervisory board and employees in the regional area of Isen Mulang City Palangka Raya. While its secondary data is emerging from Perda about the establishment and financial report of the regional company Isen Mulang City Palangka Raya, other data sources, data collection techniques using interviews, observation, and documentation. Based on the results of this research the management of the District company Isen Mulang Kota Palangka Raya based on good corporate governance principle has not been done with the maximum this can be seen from the not yet implemented Openness is still the absence of accessible websites or blogs, not yet the clarity of the details of tasks, and internal control of the company, suitability has not carried out well the company has not committed social responsibility, not yet Contribution to the PAD, has not paid the income tax because the company has not acquired profit, independence or independent has not carried out well-characterized by the still the responsibility of the responsibilities among employees, Fairness has not been implemented with the maximum that is characterized by the dissemination of information about the recruitment of employees has not been widely and still with a family system and not yet carried out training and development of employees.

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