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Impact of Composition of Board

   

Added on  2020-04-07

10 Pages2453 Words38 Views
Running head: MASTERS OF PROFESSIONAL ACCOUNTINGMasters of Professional AccountingUniversity NameStudent NameAuthors’ Note

2MASTERS OF PROFESSIONAL ACCOUNTINGProject Title: Impact of composition of board and corporate governance onperformance of firms: Australian as well as Indian Evidence1.0Introduction1.1Definitions and key conceptsFinancial performance: The financial performances of business concerns can be considered tobe of utmost significance to firm’s stakeholders. On one hand, financial performance of firmsis an important source for financing present economic activities of the firm, thus can help inmaintaining a going concern and increase the value of the business. On the other hand,financial performance can be considered as the basis for allotting dividends that subsequentlymight lure investors as well as their funds. Therefore, identifying as well as evaluatingdiverse facets that exert impact on financial performance of business concerns is of greatsignificance both to practice along with academia. Whilst it is reasonable to suppose that themanagerial capabilities of board members would have considerable influence on the financialperformance of the entity (Hermalin & Weisbach, 1991). However, it is not clear whether thecomposition of the board would considerably influence the performance of the businessconcern. 1.2Brief BackgroundSeveral prior studies have examined the influence of diverse corporate governance featureson performance of business concerns. However, the current issue is analysing outcomes ofprior researches along with the conclusions that are mixed. The role of professionalaccountant in a specific business is necessarily application of an inquisitive mind founded onthe awareness as regards financials of the corporation. This profession involves using skillsalong with in depth understanding of firms along with the environment in which the businessfunctions (Daily & Dalton, 1994). Thus, professional training in accountancy specifically can

3MASTERS OF PROFESSIONAL ACCOUNTINGassist me in taking on a pragmatic and at the same time objective approach to resolve diversematters. Being a future accounting professional, I will be able to help the company indeveloping corporate strategy, delivering advice and assisting business in reducing the cost,enhancing the top line and alleviating the risk. 1.3Literature ReviewBoard composition has several issues associated to the independence rate of different boardof directors, diversity subsisting amongst different members of the board together with theduality of CEO. In this case, the directors are also categorized in three different broad classesthat include inside directors, affiliated outside directors as well as outside directors (Kiel andNicholson, 2003). Corporate governance can be referred to as a system designed by a corporation that comprisesof certain set of rules as well as regulations for the effectual management of the corporation(Kang et al., 2007). Fundamentally, it majorly focuses on shielding the interests of thefinanciers taking into account interests of the management as well as other parties related tothe business (Bernardi et al., 2002). Majority of the research carried out considers two extensively accepted theories of corporategovernance that includes agency theories as well as the resource dependency themes. Sarkar& Sarkar (2009) study indicates sample of certain top Indian corporations and observessituations as well as several aspects of corporate governance as Indian market is consideredas a developing market. Again, it also declares that research undertaken in this area is morefocussed on the nations that are comparatively developed and hence there remains a variancein the issues when it comes to the nations that are in the developing stage (Dwivedi & Jain,2005).

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