Do you think we can revisit the purpose of Corporate Governance for a corporation? If so, what are the aspects we can consider, with specific examples?
https://youmatter.world/en/definition/corporate-governance-definition-purpose-and-benefits/
https://youmatter.world/en/definition/corporate-governance-definition-purpose-and-benefits/
"Employee ownership of the firm" is a new area. Compared to ownership by shareholders
Yes, of course, because corporate governance has to be somewhat flexible Examples include:
The link between corporate governances and disclosures might be an area of interest. It is not a new area but still it is an area of interest.
Okay. Let me explain. Since the purpose of corporate governance is about doing the right things, then the relationship between corporate governances and CSR disclosures should be the key areas to focus on, especially with regard to ownership structures as essential elements of corporate governance.
Specific example: Ownership Structures
Yes, of course, we must revisit the purpose of Corporate Governance for a corporation.
At this time, the most consideration of CG I think should be the responsibilities of the board. Due to Covid 19, stakeholder rights become less and less critical when compared with the corporation's interest.
Corporate Governance can be reviewed in order to carry out its functions properly, it is recommended every semester. Consideration of the composition of the audit committee that does not have multiple positions in the company.
I think the other area you may want to consider is the relationship between CG and firm performance. Good governance is made up of 2 components - conformance and performance - as accountants we tend to focus on the conformance (compliance) part and less so on the performance. Given governance has been disclosed for several years in developed economies, then the data should be readily available for a deep examination here. Adding CSR/ESG to this mix provides further relationships to explore.
Yes, he is right in this aspect, and I think that the time has come to dive into the concept of accounting governance that depends largely on the extent of conformity and ensuring that accounting standards are properly applied, and this is only possible with the concerted efforts of both stakeholders and management (chiefly the accounting department) as well as the external auditor and audit committee .
Thank you both. I too have been emphasizing the performance aspect. At the end without enhancing performance, in real sense what is the point of compliance? Of course, it is important..
BTW, in my question, I wanted to pay attention on any new areas or aspects. We have been discussing about the BoD, Auditing, Employees, Structures, performance etc. Considering the current move, yes we can take ESG, performance, employees (it depends) are contemporary concerns compared to 10-15 years ago. Can we see any other emerging area or sub-area to be included?
It is an extreme sort of utilitarianism without significant ethical principles
It allows the growth of mega companies backed by powerful international institutions
including the International Monetary Fund (IMF), the World Bank (WB), the
Organisation for Economic Cooperation and Development (OECD) and the World
Trade Organisation (WTO).
It changes the balance of power between states, individuals and counties and the mega
companies including the financial sector (‘the markets’) and the international
institutions.
It is disastrous because of the burgeoning inequality between nations and individuals
It is profoundly anti-democratic because of the powerful actors
It is disastrous for the environment
I think the answer is "yes" to this question. Corporate Governance is the umbrella word covering the following:
Your company must be auditable: That means the company should be first a going concern and all functions are subject to routine internal controls.
It should have tone at the top. That means: The strategy and the internal controls must be imposed by the top management. The top management has to issue a list of ethical conduct throughout the company.
The company`s strategy must be infused at all levels of the management and employees.
The part of the company`s strategy must be in tandem with environmental consciousness (CSR).
Specific examples:
Our company does not pay bribes in to capture business in foreign lands.
We strictly follow IFRS or US GAAP (whichever GAAP is appropriate in the circumstances) for reporting.
Our company is producing environmentally friendly products. I.e. we have filters on our stacks to keep the environment clean. We do pollute the rivers. Each company should disclose these facts by giving numbers. i.e. CO2 emissions, cubic meters of water recycled, etc.
I agree with your concern. It's high time to reevaluate our concern regarding the practice within and outside the company in the context of changing world. The purpose of Corporate Governance should not only be tagged with firm performance and audit, we may have to consider broader perspective as well as the contemporary issue of CSR, sustainable reporting and environmental accounting.
Corporate Governance (based on its largest definitions) should involve all stakeholders and ensure the protection of different parties interests. It should address ethics and environmental sustainability as well.
I believe, if concerned by the efficiency as well as the integrity of the corporate governance mechanism itself, we should revisit its purpose whenever needed.
Even CG codes recommendations need to be revisited as circumstances change and the broader governance aspect develops.
- If the company's performance is the sole purpose of CG and the right ethics do not fall under its layers, then we need to reconsider the aim of Corporate Governance.
- If shareholder's protection unjudiously threatens other stakeholders, we should revisit the purpose of the corporate governance
- if CG only fits in the wide scope of big companies and widens the gap between them and smaller entities ( due to unfair funding for example) then again the corporate governance purpose should be reconsidered.
- Shareholders as principals and company executives as agents; enhancing the control of the principals over the agents again to protect shareholders even if the firm's interest goes against theirs. If performance is the purpose, this approach should be questioned. And for most companies in emergent markets, this approach should be shifted towards a "majority shareholders / minority shareholders" approach.
- The notion of control and independence of the board should no longer be the focus since the digitization has empowered the control of the crowd and external parties over the company (thanks to the unlimited data shared and collected, crowd sensing etc). Corporate Governance should be focusing on new questions related to the digital era.
Thank you Hasan and Manal for your responses. Dear Manal Thank you so much for your detailed elaboration. We will consider those important views in our study.
Hi, you can refer to the following studies for better support:
Article Examining the role of gender diversity on ownership structur...
Article An investigation into the remuneration- CSR nexus and if it ...
Article Do women on corporate boardrooms influence remuneration patt...
Article The Interaction Effect of Independent Boards on Corporate Go...
Article Assessing the Governance Mechanisms, Corporate Social Respon...
Article Legitimising the Role of Corporate Boards and Corporate Soci...
Article The dynamic impact of board composition on CSR practices and...
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