Critically Discuss The Extent To Which

Topics: Corporate governance, Board of directors, Management Pages: 6 (1570 words) Published: January 6, 2015
 Online Assignment Submission

Birmingham Business School

Student ID Number: 1178691

Programme Of Study: Bsc. Business Management Year in Industry

Module: International Corporate Governance

Assignment Title: Critically discus the extent to which you consider the initiatives aimed at corporate governance reform in the UK represent an improvement to the system of corporate governance

Date and Time of Submission: 13/11/2014 11:00AM

Please ensure that you complete and attach this Submission Form to the front of all work that is submitted online.

Before submission, please ensure that your name does not appear anywhere on your work, only your Student ID number.

By submitting your work online you are confirming that your work is your own and that you understand and have read the University’s rules regarding plagiarism and the consequences that will arise should you submit plagiarised work.

Corporate governance pertains to the implementation of a set of established policies in which influence the way an organisation is managed and the style in which it operates. For policies to be efficiently and effectively implemented the execution of corporate governance is not only vital, but also essential in satisfying an organisations customers, employees, management and the interrelations amongst stakeholders involved (Bhattacharya, 2000). The late 1980s and early 1990s witnessed major upheaval in regards to continuous instances of corporate failure of several prominent UK organisations including Polly Peck, BCCI and Maxwell Communications. These corporate collapses and financial scandals were the driving force behind the development of initiatives in attempt to reform weak governance systems. Governance practitioners and regulators displayed concern towards the effectiveness of the board of directors and other governance mechanisms following corporate collapses. In many instances the concealment of frauds committed by CEOs and senior management were a direct result of their dominance of the board of directors. The board of director’s role was one that was central and an integral part in the construction and implementation of corporate strategy within organisations, they also held responsibility for ‘information disclosures and financial reporting to external stakeholders’ and so their corporate control was easily exploited by senior management (Keasey, Thompson & Wright, 2005). The enormous losses suffered by shareholders due to scandals resulted in a re-examination of managerial roles with an initiative to separate the roles of chairman and chief executive to prevent future occurrences. Donaldson and Davies (1994) view separation of such superior roles as a positive impact on corporate performance and one that should result in the reduction of agency problems. Berle and Means (1932) on the other hand state that separation of ownership from control in large organisations has brought about ‘agency problems’. The Agency theory subsequently focuses exclusively on resolving conflicts of interest amongst shareholders and corporate management (Jensen & Meckling, 1976). This framework suggests that internal monitoring mechanisms ensure the formulation and implementation of policies consistent with maximisation of shareholder wealth. Literature points to critical role of non-executive directors and the key service they provide to board committees: audit, remuneration and nomination ( Mallin, 2013). Higgs (2003) reported on the effectiveness of non-executive directors on British corporate boards. Its intent primarily was to assist in the prevention of the ‘emergence of a major corporate failure’ (Corely, 2005) within a British organisation through reinforcement of the Combined Code of Corporate Governance (Financial Reporting Council, 2003) and thus reinforcing ‘good’ corporate governance practice. The Cadbury Report (1992) further emphasized the...

Bibliography: Berle, A. and Means, G. (1932) The Modern Corporation and Private Property, MacMillan: New York
Bhattacharya, C
Cadbury, A. (1992) Report of the Committee on the Financial Aspects of Corporate Governance, Gee: London.
Combined Code (2003) The Combined Code on Corporate Governance, Financial Reporting Council: London.
Corley, K. (2005) Examining the Non-Executive Director 's Role from a Non-Agency Theory Perspective: Implications Arising from the Higgs Report. British Journal of Management, 16 (s1): S1-S4. Available from:
Donaldson, L
Greenbury, R. (1995) Directors’ Remuneration: Report of a Study Group Chaired by Sir Richard Greenbury, Gee: London.
Higgs, D. (2003) Review of the Role and Effectiveness of Non-Executive Directors, DTI: London
ISC (2002) The Responsibilities of Institutional Shareholders and Agents – Statement of Principles, Institutional Shareholders’ Committee: London.
Jensen, M. and Meckling, W. (1976) Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3 (4): 305-360. Available from:
Keasey, K., Thompson, S
Mallin, C. (2013) Corporate governance. Oxford: Oxford University Press
McKinsey (2002) McKinsey Global Investor Opinion Survey on Corporate Governance- Key findings, www.mckinsey.com
Myners (2001) Institutional Investment in the United Kingdom: A Review, HM Treasury: London
Pearce, J
Solomon, J., Solomon, A. and Norton, S. et al. (2000) A Conceptual framework for corporate governance reform. The British Accounting Review, 32 (4): 447-478.
Stapledon, G
The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations (2008) http://www.legislation.gov.uk/uksi/2008/410/part/4/made
Walker, D
Walker, D., (2009b) A review of corporate governance in UK banks and other financial industry entities: Final recommendations, (Financial Services Authority) November.
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Critically Discuss To What Extent Porte Essay
  • Discuss To The Extent Which Party Contr Essay
  • Essay about Discuss the extent to which a knowledge
  • Critically Examine the Extent of Which the Rule of Law Essay
  • Discuss the extent to which Consumer Law achieves its objectives Essay
  • Essay about Discuss the extent to which the rules on causation need to be reformed
  • Discuss the Extent to Which Psychology Is a Science Essay
  • Critically Discuss the Factors Which Contribute to Building Cohesive Groups/Teams. Essay

Become a StudyMode Member

Sign Up - It's Free
Various - L'Osteria | Casual Dresses HOT | The Struts