With the progressing of modern society, more and more companies use advanced way to manage their business. Professional manager came out under this situation. On the one hand, these managers can help to governance firms in a professional way and make working more efficient; one the other hand, because of the interest conflict among managers and other controllers in the firms, balance need to enact here to continue the equilibrium condition. This essay is the literature review from former authors and illustrated some important concepts in corporate governance. Then facing agency problem as the most popular and tough issue to make further discussion.
Key words: corporate governance; internal control; agency problem;
1. Introduction
Corporate
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Section 3 considers the relationship between corporate governance and firm’s internal control and makes comparison. Section 4 deals with a frequent problem drafts from corporate governance-agency problem. Section 5 provides a summary and identifies some remaining puzzles for future …show more content…
To make further step, Fama and Jensen (1983) states that the goal of corporate governance research is the issue of separation between ownership and management rights, where the mainly solution for this is how to reduce agency costs. Shleifer and Vishny (1997) recognized that corporate governance deals with the way whether the company's capital suppliers can ensure their return on their investment. The central issue of corporate governance is to ensure the interests of capital suppliers (both shareholders and creditors). Cochran and Wartick (1998) states the corporate governance addresses many specific issues about what senior managers, shareholders, boards, and companies do with the interaction of stakeholders.
3. The difference between corporate governance and internal control
Corporate governance is a control system that restricts enterprise management behavior through competitive external market (such as capital market, manager market, product market, merger market, etc.) and management system. According to the definition of COSO (Committee of Sponsoring Organizations of the Treadway Commission) 1992, internal control refers to the efficiency of the operation
1. I think Lloyd should not fire Steve because he was the person being provoked into action against Roberto. It is understandable that working in a busy and hot environment such as kitchen will raise pressures among the staffs. Especially on a day with high volume of guests that swarm the restaurant. Furthermore, Steve had been performing excellent well at work and always went for the extra mile for the job.
Management conducted an assessment of the effectiveness of the internal control based on the criteria set forth by the Committee of Sponsoring Organization or the Treadway Commission in Internal Control. Based on that assessment, management has determined that the internal controls are effective. In addition, Lockheed Martin’s independent registered public accounting firm has also reviewed the internal controls and also found them to be
Game theory tries to prove that the justices will act strategically when trying to grant writs according to their ideology. In “Strategic Auditing in a political Hierarchy”, Cameron, Segal, and Songer are specifically looking at search and seizure cases from 1972 to 1986, and the writs that were granted by Supreme Court. The study could not account for the district court, but it could account for the circuit and supreme court. In the judicial common space, doctrinal compliance occurs when the lower court conforms to doctrine set by the higher court.
Without crown corporations, there wouldn’t be gas or electricity services. Those things are usually seen as not profitable for private enterprises to undertake. Things like gas or electricity are demanded by so many people, if a private enterprise decided to take over, they wouldn’t make that much of a huge profit. Crown corporations consider consumers’ interests. The government will step in and establish crown corporations whenever they feel like the wants of their citizens are not met.
Both the stakeholder model and shareholder primacy provide views into the important question as to whose interests businesses should act in. When the interests of shareholders and that of a different stakeholder group are in conflict it is imperative for the business to know where they stand surrounding the issue of which group’s interests they should support. This essay presents the reasons behind taking a position in favour of the stakeholder model and argues that acting in the interests of the group which has the most merit surrounding the conflict, as this model suggests, is most appropriate. This is done by critically evaluating the arguments for shareholder primacy that state that by prioritising shareholders’ interests will ultimately benefit everyone and the argument that claims that shareholders are the owners of the business and their interests should thus be favoured. It also presents and critiques the argument in favour of the stakeholder model that claims that contributions are made by all stakeholders and therefore businesses should act in everyone’s interest.
External Locus of Control. There is a great deal of research showing that people who are anxious or depressed have an "external locus of control. " That is, the person believes that something outside of him- or herself determines what will happen. Persons with social anxiety disorder believe that other, more capable and competent people control what will happen. Take the example of a man asking a woman to accompany him to a movie.
The Failure of Dick Smith Electronics Identify: How the latest edition (3rd) of the ASX Corporate Governance Principles plausibly halts the failure of Dick Smith Electronics (DSE) will be discussed in this essay. I argue that 3rd of ASX Corporate Governance Principles might not be the best corporate governance practices for the listed entities in Australia. As can be seen from the DSE case, it complied with the majority of the principles and recommendations, but the DSE’s collapse still happened. Therefore, the better application of this practices should be developed.
In agency theory, the owners set the primary objectives of the corporation and are known as the principals. However, principals might not have knowledge or skill for getting the targets executed. Hence, principal approves the mangers to act as agents and a contract between principal and agent is made. Under this contract, the agent ought to not only remain faithful to the objectives but also protect the interest of the principal. Corporate governance is now the control of management through outlining the structures and procedures.
SCT, as Ellis (2008) notes, distinguishes ‘learning,’ which is the assisted performance, from ‘development’ which constitutes self-regulated mental activity resulting from having internalized an assisted performance. According to Vygotsky (1978) “learning is not development” but “properly organized learning results in mental development and sets in motion a variety of developmental processes that would be impossible apart from learning” (p. 90, cited in Ellis 2008, p. 534). Internalization, according to Lantolf (2000), does not wholly transfer from external mediation to what already exists internally. This means that, external mediations are not something existing out there and when we acquire it everyone would use it the same way as others.
to laws and regulations, ensuring that goals and objectives are achieved, detecting and preventing fraud and finally, managing risk. 2.2. Components of internal control Following various high-profile audit failures, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) was shaped in order to redefine internal control and the criteria for determining the effectiveness of an internal control system (Simmons 1997).
He mentioned that just individuals have responsibility and a corporation is an artificial person and so it has artificial responsibilities, however the similar situation cannot be obtained for whole business. He says that, firstly, we should ask what it refers for whom to examine the doctrine of social responsibility of business. He believes that a corporate executive is an employee of the business in a private property sys¬tem and his employers are his re¬sponsibility and says “That responsi¬bility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while con¬forming to the basic rules of the society, both those embodied in law and those embodied in ethical custom.” The primary responsibility of corporate executive is as an agent for owners of corporation or individuals who constitute charity
Naspers Limited Project 1. The three main users of financial statements include: Prospective investors use financial statements to assess whether or not investing in a company. They predict future dividends by looking at disclosed profit in the financial statements and can judge how risky a business is by fluctuating profits. Lenders and Other Creditors (institutions like banks and other lending institutions) use financial statements to decide whether to help the company with working capital or to issue debt security to it.
The participants include the board of directors, managers, shareholders, creditors, auditors and stakeholders (Ramadhan, 2012). It further identifies the rules and procedures incorporated in decision making within corporate issues. Incorporation of corporate governance enhances the development of a structure that seeks to enhance proper achievement of organizational objectives through identification and incorporation of social, legislative, market and environmental aspects that directly affect the corporate functions of the organization. The adoption of the Act sought to ensure that businesses adopted high operational standards necessary in influencing the adoption of effective financial procedures that meet the stakeholder interests. Therefore, the adoption of the Sarbanes-Oxley Act within U.S. firms remained instrumental in ensuring that the firm meets the financial obligations of stakeholders through the adoption of the corporate governance
A controlling methods for authorisation, recording, including automatic internal check. iii. Managerial supervision and reviews, including internal audit. In short the main aspect of an internal control is to provide an organisational planning where IBC can subdivided tasks, appoint responsible and qualified employee, and to set up a clear line of authority.
A system to check and balances the benefit of all the board of directors and to avoid some of top management from making decisions that only benefit themselves is created and named corporate governance. Corporate governance means the system of rules, practices and processes by which a company is directed and controlled. The set of rules provided as a guidelines for the board of directors to make sure that accountability and fairness in a company’s relationship with its stakeholders such as financiers, customers, management, employees, shareholders and also society in order to achieve company’s goals and targets in a manner that add a value to the company. All of the stakeholders play an important role in corporate governance to ensure that