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Corporate Governance Law - Assignment

   

Added on  2021-02-19

14 Pages5321 Words138 Views
Corporate GovernanceLaw

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1MAIN BODY...................................................................................................................................1CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................12

INTRODUCTIONThe term corporate governance is a set system on the directions are being provided to thebusiness for implementation of effective controlling measures. corporate governance laws aregeneral mechanisms and processes through which the corporation is being controlled andgoverned in order to maintain sufficient balance in the company in context to its stakeholder.failure of corporate governance results in The present essay shows an examination of recent scandal of an organization based onthe failure of corporate governance of the corporate. It includes a detailed examination of thescandal and determination of major reasons behind the scandal. Further, it examines corporateand governmental response over the scandal along with the some legal issues relevant with theissue. In addition, the essay provides appropriate solution regarding corporate governance inorder to avoid happing of similar corporate governance misconduct within the business. For thepurpose of providing the understanding regarding corporate governance misconduct, a case studyof Accounting scandal of Toshiba is being describes in the essay. The company was founded inthe year 1939. It had overstated its financial income by more than $2 billion in recent years thatlead in occurrence of professional misconduct with the company.MAIN BODYCorporate governance refers to set of rules and regulations on the basis of which abusiness needs to formulate its objectives, strategies and plans for the company in order toperform various business activities. It enables the company in determining differentresponsibilities and rights of the corporations against another party. Furthermore, there aredifferent laws in the English legal system that makes the company in setting their corporategovernance. Financial reporting council publishes major laws and rules to be comply by thecorporation in order to develop ethical corporate governance within the firm.Transparency rules is one of the most essential rule that makes the companies to maintainthe transparency in each information provided by it to its stakeholder in order to show its actualperformance to its stakeholders. Moreover, the laws regarding corporate governance also make itcompulsory top include the stakeholder in the meetings conducted by the company in order totake several board decisions such as for setting remuneration of executives, deciding amount ofdividend to be paid to stakeholders, disclosing company's actual financial position, changing1

corporate structure of the company, etc. This rule ensures elimination of happening of any fraudor misconduct within the business. Furthermore, as per the law based on the corporate governance also make it compulsoryfor the company to disclose its policies and procedures to the stakeholder. Along with this, it isalso compulsory to disclose how the company is adopting various code of conducts at the time ofperforming any business activities 1. This rule helps in ensuring adoption and compliance of eachlaws applicable to it and reduction of fraud and misconducts from the business as well.A corporation performing its business activities within the country needs to comply witheach corporate governance code of conducts provided by the financial reporting council. Anynon-compliance leads in attracting penal provisions towards the country. In addition, failure ofadopting corporate governance may result in happening of financial, ethical and othermisconduct within the firm and may also cause a scandal in the hands of company.In the recent years, Toshiba started overstating its earnings by more than $2 billions forover 7 years. The overstated amount was more than 4 times of the investment made by thecompany in the year 2. As per the code of conducts relating to the corporate governance, it isessential for each company to show actual financial position to its stakeholder. As per the rulesbased on the transparency, it is required by the business to show each and every financialtransaction made by the company accurately. In addition to this, to provide proper disclosure ofeach assumptions, policies and procedures adopted by the company 3. As Toshiba failed toprovide accurate information regarding actual financial performance and transactions made by itduring the year. The misconduct made by the company covered under failure of adoptingcorporate governance policies and code of conducts properly. Furthermore, as the company isperforming its business activities in different countries at global level, the misconduct hadrelevance with the corporate governance codes at international level.1Elmagrhi, M.H. and et.al., 2018. Corporate governance disclosure index–executive paynexus: The moderating effect of governance mechanisms.European Management Review.2Lombardi, R. and et.al., 2019. Corporate corruption prevention, sustainable governanceand legislation: First exploratory evidence from the Italian scenario.Journal of cleanerproduction,217, pp.666-675.3The moderating effect of governance mechanisms.European Management Review.Blendinger, G. and Michalski, G., 2018. Long-term competitiveness based on value addedmeasures as part of highly professionalized corporate governance management of GermanDAX 30 corporations.Journal of Competitiveness,10(2), p.5.2

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