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INF 80018 - The Corporate Governance Failure of Parmalat

   

Added on  2020-03-13

3 Pages1318 Words162 Views
Finance
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1Consider the corporate governance failure of Parmalat described by Solomon (pp. 38-40)and list the 3 major corporate governance failings identified.It is denoted in the past studies that there are some elements that need to be considered by themanagement of the organization in order to be in the market and to compare with the rivals in themost productive (Tricker, 2015). Though, those companies that are not able to run their rules asper the basic standards of the society face a lot of the difficulties to survive in the market. This isthe same reason with the Parmalat faced the downfall. It has been observed that the major governance failings of Parmalat are empirical evidence thatconfirms the lack of monitor structure. It eventually damages that factor of accountability of thefirm.There was no proper role of control structure and the controlling shareholder is present. Thisbecame the main reason for the failure.Italian corporate governance standards are not entirely fulfilled by Parmalat. These were the main reasons that become the reason for the Parmalat failure. However, it hasalso been observed that Parmalat’s corporate governance structure is eventually failed to complywith some of the key existing Italian corporations (Bushee, 2013). Other than this, the role of theexternal auditor along with the internal auditor as the non-effective monitors seems to this majorissue in to the global argument (Grossi, 2015). The concerns that are highlighted in the abovediscussion became the reason for the downfall of the Parmalat as this organization did notconsider the ethical issues of the society which lead them towards the path of destruction. What mechanisms, if in place that at that time may have assisted in avoiding the Parmalatfailure.The management of Parmalat must need to incorporate the brief knowledge about the legalaffairs of the Italian environment because it eventually affected the performance of theorganization. It is denoted in the study of Qian (2015), those companies that are not able tounderstand the legal issues cannot be able to stand in the competitive environment. This is thesame case happened with the Parmalat. It is denoted that those companies that are able to copeup with their concerns can be able to sustain in the competitive environment for the long period
INF 80018 - The Corporate Governance Failure of Parmalat_1

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