FAILURE IN CORPORATE GOVERNANCE AND RECOMMENDATION
Corporate Governance maybe define as the structure and corporate policy implementation of rules and regulations that is administered and controlled by the corporate people for the benefit of their external and internal concerns including their shareholders, employees, supplier, government and their customers of how the corporation is governed and regulated. Corporate governance may prove the transparency of the company through auditing and releasing of their corporate profile to the public. This transparency includes their current financial standings, obligations, corporate revenue, releasing of dividend for shareholders and officers and employees concerns including their products and other information may be attributed to be discussed during company presentation.
If the public found out that a certain business is successful it will highly be reflected in their corporate governance and standings in the perception of the public they will be highly interested to support the company for their good standing but they may prevent these companies who have a bad reputation in corporate governance. People may realize that the company has bad corporate governance maybe seen through media publicity, controversy and facts. Company’s who suffered mostly from bad images due to corporate governance may fall down; they must learn to uplift their company through positive promotion before its total closure they must gain back the confidence of the public to restore their position in saving their business.
Companies may experience success in corporate governance and they should maintain their position but companies may also fail due to various reasons. Companies like Enron, Xerox, GEC Marconi, Cadbury, Satyam and Walmart among others are large corporation but failed in corporate governance because of issues in auditing their finances, controversies about funds, code of conduct, graft and corruption, disobedience in government existing law, personal interest and problems in corporate leadership. Things like these make the company weaker and unresolved that they tend to neglect and provide solution that may have come to the point of failure. In the following companies let us consider what went wrong to their corporate governance.
Enron company has been stated to have a sustainable work progression but the investigation creates a controversy that the auditing committee that audited their assets and financial standings created a conflict and had made no attempt to provide an honest accounting practices or loyalty and discipline that is trusting, this compromises their standing in transparency of their real status. There are also controversy about employees and executive compensation over privilege that it shows that most high rank employees profited from transaction without due process or strategic goals. (SPE, IFAC, 2003)
Wal-Mart which is considered as one of the best US Supermarket leaders fails to comply with their own standard practice. They have exercised a strong policy in the recent years of operation and they are largely envied for their great corporate governance but during the early 2000 they have not sustain their position. They have shown weakness in implementing employees policy in internal control, they have shown controversies among employees especially discrimination labor violation and negligence about their behavior. Shareholders also have series of controversies on compliance, inhibiting expansion and other issue that has flooded the media and this has failed their company.
There are many other companies who have gone through a series of governing policy failure that exploded to endure the risk of failing as shown in Dow Jones Index that makes it even hard to give recommendation to their disastrous situation because they are leaders in their respective industries. If there is opportunity to give recommendation to companies such big as this, they may need to change or maintain any or all of the following area;
1. They must implement a very strong system of transparency in the eyes of the public by showing their complete financial standing. By showing their financial standing they must hire an independent auditing company that is balance and well respected to eliminate any form of doubt on the part of the shareholders. 2. Strict compliance in the government rules and regulation that shall embody a stronger presence of their position, practices and attitude. They must not take for granted their violation because the government has all the power to control their company respectively. They must work hand in hand to follow its corporate mission as mandated by the board with respect to the shareholders and the government regulation. 3. The risk management and the board respectively must take full account and consideration to solve such problem so as not to back-pass it to each other. The CEO has all the potentials to gain control but it is the board of directors who must need to initiate this control. 4. They will need to fulfill their obligation to the shareholders no matter what position they may have in the eyes of the public.
Credit:ivythesis.typepad.com
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