Topic 2 – Corporate Governance Situation: Corporate governance has been seen more as a necessity...

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Topic 2 – Corporate Governance    Situation:  Corporate governance has been seen more as a necessity than an option for organizations in recent times due to several large-scale corporate collapses both abroad and in Australia.    Task: Answer the below questions  Define corporate governance and its purpose for organizations  The collapse of Enron and HIH insurance were seen as a breakdown in corporate governance. What were the circumstances surrounding their demise?  What are the Australian Stock Exchange Corporate Governance Council’s Corporate governance principles and recommendations?  Are the principles and recommendations mandatory for all organizations to follow?  What does ‘Comply or explain’ mean? Does this restrict the flexibility for organizations to decide whether or not to incorporate corporate governance principles?  Give a brief explanation of principle 7 and it’s recommendations.  What is the function of a risk management committee?  What is an audit committee? An audit committee should contain a majority of independent directors. What classifies a director as independent?    
	
Document Preview: Topic 2 – Corporate GovernanceSituation:Corporate governance has been seen more as a necessity than an option for organizations in recent times due to several large-scale corporate collapses both abroad and in Australia.Task: Answer the below questionsDefine corporate governance and its purpose for organizationsThe collapse of Enron and HIH insurance were seen as a breakdown in corporate governance. What were the circumstances surrounding their demise?What are the Australian Stock Exchange Corporate Governance Council’s Corporate governance principles and recommendations?Are the principles and recommendations mandatory for all organizations to follow?What does ‘Comply or explain’ mean? Does this restrict the flexibility for organizations to decide whether or not to incorporate corporate governance principles?Give a brief explanation of principle 7 and it’s recommendations.What is the function of a risk management committee?What is an audit committee? An audit committee should contain a majority of independent directors. What classifies a director as independent?

David · Accepted Answer

Corporate Governance
Corporate Governance
 pg. 1
Corporate Governance 
Student’s Name 
Date 
Course Name 
University 
Corporate Governance
 pg. 2 
Introduction 
Corporate governance has been a broad concept that pertains to all aspects of the ownership and 
management of a firm (Krafft & Ravix, 2005). A similar, expansive definition was provided by 
members of the Cadbury Committee (1992) who noted that corporate governance was a system 
by which a firm is managed and controlled by a leader. While these definitions were instructive, 
these definitions are not sufficient for the definition of the relationship issue among the 
stakeholders of a firm. Members of the World Bank (2009) noted that corporate governance is a 
reference to the “structures and process for the direction and control of corporations, the 
relationship among management, the board of directors, shareholders other stakeholders” (p. 1). 
Members of the OECD (2004) noted that corporate governance was a “set of relationships 
between a company‟s management, its board, its shareholders and other stakeholders” (p. 11). 
The relationship between the firm and its stakeholders was at the core of corporate governance 
(Krafft & Ravix, 2005). 
Corporate governance is considered as the decision making structure or process of the 
organization which focuses on the monitoring and controls of the firm and management which 
helps the company to achieve its set goals and objectives. The efficiency of the corporate 
governance is based on the controlling agency problems that incurs between the management 
and the shareholders of the company.  
The main objective of the organization is to enhance the shareholder’s value, and to increase the 
confidence of the investors and establishing a strong trust in the customers which will help the 
company to build and attain a strong competitive organization. With strong corporate governance 
across the organization the company will be able to have a strong reputation and solid formation. 
They have a strong focus on the corporate governance so as to ensure and provide requisite of 
Corporate Governance
 pg. 3 
leadership, policy, strategy and internal control so as to attain a competitive edge and value 
proposition of the organization. 
As the corporate governance have a strong focus on the financial perspectives of the company as 
well as increasing the shareholder’s value, the company needs to be highly concerned about the 
success of the company for which the ethos of the company is an important factor which affects 
the control over the firm. Apart from ethos, the structure plays an important role as the company 
is concerned about the different hierarchy and structure that the corporation has which affects the 
corporate governance of the company. The industries needs to adequately regulate and control 
themselves as per the competition, the government tries to implement different aspects as well as 
laws and regulations on the basis of which the company needs to work. 
Collapse of Enron and HIH insurance:

Topic 2 – Corporate Governance Situation: Corporate governance has been seen more as a necessity than an option for organizations in recent times due to several large-scale corporate collapses both...

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