Corporate governance and accountability Coursework

Corporate governance in leading business has become a critical issue which ought to be addressed. Finally, the solutions to the problems identified are discussed side by side with the future trend of corporate governance. An effective board behavior is dependent on a number of parties. These parties include the non-executive, the managers, and shareholders. The way these parties relate determines the success or the failure of the company. A good relationship between the shareholders and the executive directors is of importance for the success of the corporation. This relationship will be explained better in the agency theory. It is however unfortunate that the board faces challenges such as prejudices and lack of transparency in operations, spelling doom for the company, since the malfunctioning of the board may not go unnoticed by the investors who will, in turn, be discouraged and shun the company.

Non-executive directors always have their eyes on the executive directors, ready to raise alarm at the slightest malfunction by the executive directors. The boards maintain the shape of the company as well as upholding its reputation, by setting the guidelines for the company operation. They should ensure proper distribution of the organization’s resources, to avoid chaos which may arise in the event of stalling the organization’s operations. Combination of the two roles of the board of directors clearly shows that the board capital affects that not only is board monitoring but also provision of resources, which determine the success of the organization, achieved through moderation of the two relationships. Failure of the board of directors to achieve their mandate may have very serious repercussions on the life of the organization as a result of distrust developed in the shareholders.

A case in point is the Anglo-American shareholder capitalization. The shareholders developed a serious lack of confidence in the organization. Other have developed ways of assessing and profiling an organization’s culture in order to improve the change to a new, shared culture. All of these elements and “reinforcers” of organizational culture will be increasingly more dependent on their ethical aspects, as will the resulting behavior. KPMG Forensic Advisory's Integrity Survey 2005-2006 presents interesting data that is instructive, including data shown in Table 5. 10 that was gleaned from over 4,000 survey responses from U. S. In addition, ironically, when the current evidence is compared to what ethical cultures could be as control systems, they were found to be suboptimal. The discussion to this point has provided an understanding of why organizations are corporations, not-for-profit organizations, or professional firms—should develop an ethical culture, what shape that culture should take, and why.

The design and introduction of an ethics program are well within the capacity of professional accountants because of their exposure to the nature, purpose, and workings of internal control systems that are essential underpinnings to credible financial statements and reporting. Professional accounting bodies have developed pronouncements and guidelines related to ethics programs and antifraud programs, such as the AICPA's Statement on. Theoretical frameworks Over the years, there has been an evolution of theoretical frameworks that help in explaining corporate governance. This approach suggests that lack accountability makes it hard for one to identify the relationship of governance and responsibility in an organization. In this case, the approach clearly states that accountability helps us understand the corporate governance as well as corporate social responsibilities of an organization, (KALR, 2002).

Agency Theory There has been an agency issue that arose due to the existence of separation of ownership and control. The agency problem was first studied in 1973 by Ross and later by Jensen. According to Jessen (1976) and Ross (1973), managers are defined as the agents while the shareholders of a company are defined as the principals. Stakeholder theory against agency theory There is a significance of the theory is a highly motivate to the theoretical paradigms. According to the stakeholder’s theory, the description and definition are based on the normative orientation, (Shankman, 1999). On the other hand, agency theory is coined around the general model of stakeholders and companies. The balance characteristic states that the assurance statements prepared should cover both aspects of positive and negative aspects of the business and hence creating a mental picture of the target group.

The second characteristic involves clarity of the assurance statement. Nothing good can thrive in a volatile political environment which will scare away investors. On the other hand, a good political environment will guarantee stability, growth and lots of investment opportunities for any willing investor. Technology Like they always say technology is the mother of invention. When the level and capacity of technology in a country is well advanced then definitely the issue of corporate governance would be handled efficiently unlike where technology is crippled. Religion Ethical teachings in different religions may cause difficulty in the future and thus harmonize based on religion may be difficult as there are certain differences in core teachings of Islam and Islamic accountancy. Two-tier boards have an advantage over unitary boards in that they provide a much greater opportunity for the stakeholder.

The role of the executive director is to collaborate with not only the board of director but also to integrate with the rest of the organization Their regular meeting with the board keeps them informed on the operational issues, after which they develop strategic solutions to complex challenges facing the organization. The executive directors also oversee the heads of the various departments, including marketing, fundraising, and program development. In addition, they oversee the lower-level executives in larger organizations. Department leaders rely on the executive directors for directions in their operations. However, it is stated in the MCCG that remuneration is also provided to bring the right talent in. As badly structured executive pay will lead to weakened company performance through excessive risk-taking or focus on short-term performance, reduction of investor and community confidence in the corporate sector, (Bianco, 1999).

Transnational governance is not deposing the national regulations all together but in fact, it is an extension of the current approach. Previously, the enforcement of laws and regulations is involving only the public actors, institutions and at the national level. However, as transnational governance takes place, this new approach incorporates various elements into the picture which consists of a range of actors, institutions, and levels. 5% if met would grant share options to a total of 260 senior executives. However, the term were slightly different for Sol Trujillo, who faced a shorter time on his targets, which made him eligible for 18 million share options and also was payed just under $12million including a short-term incentive of $5. 2 million which was twice as that of any other CEOs in the same sector even after the company’s share price was lower than the time when he joined the business.

This is an example of Executive remuneration which was caused because of lack of transparency and imbalance of the power between the stakeholders and the CEO. Corporate Accountability Corporate accountability is the explanation of policies as well as the matter disclosure and transparency of matters of a firm to specifically those that the firms serve. Conclusion Considering how the world is turning into a place where many corruptions are taking place under the table it will bring out the need for whistleblowers to emerge and be a threat to people who are abusing their power and status. A strong need will arise for the increase of protection policies in whistleblowing allowing whistleblowers to voice out malpractices and be safeguarded against threats to them.

In the future global governance will increase due to a world rapidly coming together, however taking into consideration of cultural, political, religious, geographical factors this trend may take time to be achieved. Effective corporate governance linearly dependent on the strategies put in place by the board of directors. In this case, the board leads them in the management, since it manages the resources of the company on behalf of the shareholders. I. F. H. G. G. P. Italian corporate governance: effects on financial structure and firm performance. European economic review, 43(43), pp. Hambrick, v. W. JENSEN, M. C. A. M. W. Organizations, New York: John Wiley and sons. ROBERT, J. No one is perfect: The limits of transparency and an ethic for ‘intelligent’ accountability.

Accounting, Organizations, and Society. In: s. CORPORATE GOVERNANCE AND ACCOUNTABILITY: JOHN WILEY AND SONS LTD. Wheeler, 2002. Focusing on the value: reconciling corporate social responsibility, sustainability and a stakeholder approach in a networked world. Denver, s. n. Legitimacy theory Adidas has been able to not only publish data of the surplus sports ware and gear they sale. It has also been able to establish various techniques that help in maximizing its sales and helping through support of young talented sports people. This acts as a scholarship program that helps young people to join sports academies or persue education through sports aiming at the vision 2030 to eradicate the illiteracy globally, (Gray et al. The company having majored into sports gear, has expectations that are revolved around it, (Chan, Watson and Woodliff, 2014).

The decision has not only helped in serving the company, it has also helped in sending people to school and eradicate illiteracy by almost 30%, (Fernando and Lawrence, 2014). The supervisory board looks after all the affairs of the firm. This is an example of managerial capture which is the nature of legitimacy theory. Although, the management board or the executive board still performs control over the firm they have to present and discuss the issues with the supervisory boards. The management board consists of the executives from the firm. Having a good relationship with the supervisory board gives rise to smooth workflow and get the stakeholder invested in the work. The third characteristic involves the reliability aspect. The reliability characteristic relates to the stakeholder theory as it explains the relationship that exists between Adidas and the members of the public.

A reliable assurance statement should have the characteristic of getting trust from the members of the public to communicate the expected message without any doubts at the end. Huge inequalities are existing in the aspect of income and wealth levels between the high and low class in the UK economy. The asymmetrical relationship that exists between the two groups in the UK shows that there is a negative external factor that influences the normal functioning of the taxation system in the country. About 37% of the assurance statements evaluated comply with the ISAE 3000 approach and hence making it have a wide recognition by many companies in the world. 44% of the evaluated assurance statements comply with the GRI guidelines and hence making it the preferred method used by most companies across the world.

The second element involves making of specific declarations in the assurance statements, (Bowens, 2008)). The information presented in the declaration part include the target audience, declaration of independence and also any relevant. The third element of assurance statements involves the provision of opinions and recommendations. In most cases, the corporate governance system in the United Kingdom uses the shareholder supremacy approach that significantly reflects on the legitimacy theory, (Freeman, 1984). Due to this effect, there is rather a minimal stakeholder agreement among the United Kingdom companies which at the end of the day this leads to managerial capture, (Robert, 2009). Has Accountability Been Discharged? Generally, a corporate organization such as Adidas has been able to not only discuss the activities within the company, but they have also been able to point all the activities that they take part in.

They have made sure to keep all the information readily available to the public and whoever interested. They maintain transparency through up-to-date communication and press release. (2000) 'the new social audits: accountability, managerial capture or the agenda of social champions?’ European Accounting Review, 9(1), pp. Cooper, S. and Owen, D. Corporate social reporting and stakeholder accountability: The missing link. Accounting, Organizations and Society, 32(7-8), pp. C. , Watson, J. & Woodliff, D. (2014), "Corporate Governance Quality and CSR Disclosures", Journal of Business Ethics, 125(1), pp. Deegan, C. (1996), ‘Do Australian companies report environmental news objectively? An analysis of environmental disclosures by firms prosecuted successfully by the Environmental Protection Authority’, Accounting, Auditing & Accountability Journal, 9(2), pp. Guthrie, J. & Parker, L. D. (1989), ‘Corporate social reporting: A rebuttal of legitimacy theory’, Accounting and Business Research, 19(76), pp.