Introduction to Corporate Governance
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Added on 2020-02-17
Introduction to Corporate Governance
Added on 2020-02-17
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Maxwell communication
Table of ContentsIntroduction......................................................................................................................................3Task 1...............................................................................................................................................3Theory of corporate governance.................................................................................................3Task 2 .............................................................................................................................................6Governance structure, risk management policies and organizational chart of maxwell.............6communication ........................................................................................................................6Task 3...............................................................................................................................................8Task 4...............................................................................................................................................9Conclusion.....................................................................................................................................10References .....................................................................................................................................11
IntroductionCorporate governance is a blueprint of corporate policies itself, In short term it is the waywhich corporates are using to govern their companies. Maxwell case is one of the most popularcase regarding corporate governance. Corporate governance is refer to maximize theaccountability of company and eliminate the chances of massive disaster before they occur. Wellexecuted corporate governance is helps in maintaining balance of an Maxwell communication toachieve its end goals. Maxwell communication corporate governance totally fail at the time whenRobert Maxwell was found drowned at the back of his yacht and it resulted the collapsed ofmaxwell other businesses also. Maxwell communication face these disaster because of their poorhandling of corporate governance. Corporate governance is a very important tool for a companyas important as company's primary business plan. It corporate government uses effectively it hasthe ability to prevent or eliminate corporate scandals, fraud and the civil and the criminalliability of the company.(Weingarten and et.al 2016)Task 1Theory of corporate governanceAs corporate governance is a must practise for each and every organization and corporategovernance is indulge with all the economic and non-economic activities of an organization.Literatures done on corporate governance create some understanding on the meaning ofgovernance but it is not enough to describes the precise meaning of governance. Some problemswhich emerges are such as- regulate, manage, control, govern and governance. For reducing suchambiguity there are number of fundamentals theories available which underlining the corporategovernance. Some of the most important corporate governance theories which an maxwellcommunication needs to consider are agency theory, Transaction cost theory and stakeholdertheories.(Mooney, Kaplan and Lammers, 2016)Agency theoryAgency theory consider as to define the relationship between owners such as principals,shareholders and agents such as company managers and executives. As per according to thistheory shareholders of maxwell communication who are the owners and the principals of thecompany hires the agents to perform and manage their work. The agency theory is a simpleconcept of that reduces the organization into two participants which are shareholders and
managers. Agency theory defines that managers and employee in an Maxwell communicationshould be self interested, Which seems missing there as the relationship between the managersand stakeholder which are employee is not good as each and every decision were taken by theowner of the company (Vu, Guo and McCombs, 2014) In the agency theory shareholders have expectations to their agents to act upon situation sand make decisions in the interest of principal and principal should protect the interest of theexecutive and the managers . In the case of maxwell communication the principal did not fulfilits responsibility as a owner which resulted disastrous situations for the employees andmanagers. Agency theory defines that the goal of an agent is totally different from the principals,here the assumption is that principals have to suffer from the agency loss which consist as lessreturn on the investment made by them because they are not the one who directly managing thecompany. Some part of the return will go to the the agents if they were managing the companydirectly. Moreover agency theory suggest the financial rewards system as it will motivate themanagers and executives to maximize the profit for owners.(Zuo and et.al, 2014)Apart from stated advantages and specification of agency theory, many researcheracclaim some limitations of agency theory as well. The methodology of agency theory isdominating, based on individualism, narrow defined motivational model, not simple to manage,disregarding towards other theories. Transaction cost theoryTransaction cost theory surrounded by various factors such as economics, law andorganization. This theory tries to look upon the firm such as Maxwell communicationwhichcomprises people with different objectives and views. The assumption lies in transaction theoryis that the organization has to became so large so that they have effect on the substitute for themarket so that they are in the position of evaluating, analysing and determining the allocation ofresources. The unit of analysis used in the transaction theory is the unit of transaction taken placewithin the organization, because of that the consolidation of people with transaction defines thattransaction cost theory managers are the opportunists and they have work to arrange the firmstransactions according to their interests. Transaction theory also indulge with some limitations and weaknesses as transactiontheory is only focus on the cost minimization factor, It also understates the cost of organizing, Ithas no concentrate upon and totally neglect the social relationship in economic transactions.
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