Accounting Theory Analysis: Corporate Governance Decision Making

This essay provides a comprehensive analysis of accounting theory, focusing on the critical role of corporate governance in shaping strategic decision-making within organizations. The study examines how corporate governance frameworks influence the interests of various stakeholders, including shareholders, investors, and customers. It delves into the significance of reliable decision-making processes, the nature of corporate corruption, and the importance of continuous vigilance to ensure ethical practices. The essay also explores various approaches to mitigate risks associated with poor decision-making, emphasizing the need for transparency, stakeholder engagement, and proactive measures to foster trust and ethical behavior within businesses. The paper highlights the impact of managerial decisions on corporate performance and the necessity of robust governance structures to prevent corporate collapse and promote sustainable business practices. The essay draws on insights from various academic sources to support its arguments, offering a valuable perspective on the intersection of accounting theory and corporate governance in the modern business environment. The document is contributed by a student to be published on the website Desklib. Desklib is a platform which provides all the necessary AI based study tools for students.

Running head: ACCOUNTING THEORY
Accounting Theory
University Name
Student Name
Authors’ Note

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Executive Summary
The study at hand explicates exhaustively regarding the significant role that corporate
governance plays in the process of delivering strategic course of framing decision that
subsequently can function as per their interests of different firms. Essentially, this study
illuminates regarding significance of framing decisions by the administration that again can
accelerate entire processes of actions and can necessarily be regarded as corrective activities
by diverse professional circumstances according to the best interests of the corporation.

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Table of Contents
Introduction................................................................................................................................3
Substantiation of the statement of the article.............................................................................3
Reliable corporate decision making process..............................................................................4
Nature of corporate corruption...................................................................................................6
Approaches that can be undertaken for the purpose of mitigation of the identified risks.........7
Conclusion..................................................................................................................................9
References................................................................................................................................10

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Introduction
This study has selected a journal written by Jeremy Pearce Dr on corporate governance
illustrating importance of framing decisions in a business and its impact on shrinkage of
corporate as well as inefficiency of operations. This study thereby assists in comprehending
corporate governance in establishing strategic guidelines in superlative interests of
enterprises. In itself, the existing research paper highlights that speedy reply necessarily
needs to be carried out for the purpose of remedial actions for different managerial state of
affairs that are not in conformation with identified interests of corporation. In addition to this,
this segment also talks about various ways out that can essentially aid the business entity to
move forward.
Substantiation of the statement of the article
As per the given study under deliberation, corporate governance is necessarily the set of
regulations, various practices as well as procedures by which a corporation bets guided and
controlled properly. In essence, corporate governance includes balancing and evaluating
interests of varied stakeholders, namely, shareholders, investors, customers as well as
suppliers, governing units along with the community (Quinn Jr 2014). As rightly put forward
by Scott (2015), corporate governance also delivers appropriate structure for attainment of
objectives of the business enterprise and covers different spheres of management, action
plans as well as controls to different performance dimensions.
Reliable corporate decision making process
As stated in the given article under deliberation, business concerns can be regarded to be
particularly nexus of corporate decisions. Essentially, the quantum of decision making each
and every day either helps the company to make advancements in the forward decision at

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times in the best interests. However, it might also get the company to the rear direction that is
away from the best interest or leaves the business concern in a neutral situation due to
altering variables. Consequently, constant vigilance is said to be imperative. Successful
business enterprises can be identified to be aspects that can effectively sketch out enhanced
economic decrees in place of other competitors (Quinn Jr 2014). In essence, there is no
company that is against decision framing. In different aggressively competitive places of
marketing products/services, best possible performance is comparative and is not supreme
provided certain given different complexities/intricacies involved in exercising suitable
decision framing.
Furthermore, opinions stated in pieces of writing and articles talk about most favourable
decision making. This can be considered to be complicated and a many-sided approach
towards authority of decision making is essential. In addition to this, this in essence takes in a
combination of different rules, various internal values, processes of moral decision making,
leaders with moral value, and rigorous processes of recruiting workforces (Linsley et al.
2016). In addition to this, corporate governance also refers to zero tolerance of firms towards
poor decision making, flat network dominated by various democratic processes and valid
improvements for decision making. Thus, there are specific combinations of diverse
components for appearing at proper decision making.
In addition to this, the present article under deliberation refers to agency theory that again
turns to specific fiduciary duties that are imperative for averting overall inclination of the
agent to participate in self dealing (Mitchell and Nørreklit 2017). Again, it can be observed
that in the current corporate world, specific fiduciary duties are essentially shielded using
various rules and regulations, and are further strengthened by various additional provisions.
This can help in ensuring that different directors can frame their decisions in the best interests
of the business enterprise. In addition to this, this is juxtaposed against the background of

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maximization of profits along with returns for firm’s shareholders (Smith 2017). Essentially,
this can be evaluated within the context of short term.
Again, the current study under deliberation also elucidates about situational nature of
decision-making. Essentially, it is rather easy to comprehend the reason that is necessarily
behind failure of conservative approaches to different regulation. This can help in becoming
responsive at the time when different directors are faced with different stimulating and
inspiring combination of immediate pressures of different business and on the other hand
self-interest. Essentially, it is mainly because of reliance on processes of assertions
undertaken can be referred to be not enough. In essence, the present piece under deliberation
emphasizes on the initiation of continuous revelation. Also, enhanced stress on particularly
materiality can facilitate in design as well as development of high quality environment for
carrying out decision making (Beattie 2014). In this regard, it can be said that various
approaches as well as advances towards constant disclosures can smooth the progress and
make good sense regarding business decisions and corporations have the requirement to abide
by specific advances. Fundamentally, addition of stakeholders’ materiality of corporation
together with the continuous disclosures of the firm presented in the framework for the
purpose of corporate governance cannot in any way replace process of framing good
decisions.
Analytical evaluation of the current article under consideration can help in emphasizing on
the trust factor in this context. According to the present study, trust can also be regarded as
the definitive currency for achievement of success in different markets (Parker and
Fleischman 2017). This is primarily driven by various market driven economies and basically
trust can be augmented by means of reliable information derived from various incredible
sources. Fundamentally, business concerns that necessarily carry out proactive processes to
generate trust by way of augmented transparency in the processes of decision making can

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succeed in attaining competitive advantage. Again, this does not inevitably need external
framework of proper reporting and procedures of accounting. This can act as a substitute and
function as a time taking proposition at the same time pricey. Nevertheless, this does not
necessarily refer to the need to present reports and reporting procedure cannot necessarily
attest to be a replacement for apt process of arriving at decision (Mohammadi 2015). Bearing
in mind the above stated facets, it can be hereby said that steady together with reliable
business decisions can aid firms to function in a swift manner. This can also help in
generation of ground-breaking ways of articulating the way and ascertaining reasons behind
corporations can be believed without any sort of external impact.
Nature of corporate corruption
The article under consideration mentions that corporation can be referred to as spoiled. In
consequences, any sort of flawed decision that is particularly not in the best interests of the
business enterprises can be indicated as corrupt decisions (Banerjee 2014). Evaluation of
current article replicates that particular economic decision regarding stakeholders’ can be
considered as a assertion/pronouncement in the way towards collapse of business concerns .
Essentially, crumpling of all business concerns begin with moral lapses in a specific decision
that is commonly ensued by efforts to cover up poor business decision at the outset. Also,
each and every corrupt decision that does not indicate towards collapse of the corporate can
be regarded to be inefficient. This can be considered in relation to optimum presentation of
performance of the business concern. As correctly indicated by Dyckman and Zeff (2015),
decisions framed and designed by various imperfect individuals can be said to effectively
inclined to various irrational, self-centered and emotional decision making. Furthermore, this
might probably not be as per the best interest of the corporation. As suggested by Otley

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(2016), individuals can be said to be intrinsically flawed, consequently, corrupt processes of
decision making can be regarded to be a norm and essentially not omission.
Collapse of the corporate
As presented in the given article, corporate collapse essentially starts at the time when board
of the corporation. This is said to be associated directly to various players engaged in the
procedure (Richard et al. 2016). The author of the current article is of the opinion that
different business enterprises suffer from different inefficacies due to policies framed by
management. Furthermore, the current article under consideration also adds that there are
numerous cases that firms essentially tend to be de-facto fiefdioms. In actual fact, decision
making orient around particular specifications that in essence satisfies the ego along with
system of belief of the management. This is how it limits bounded steadiness. In addition to
this, studies undertaken by different scholars validate the notion that bad strategic decisions
can lead the way towards poor results. Basically, Baxter (2014) refers to failure that emanates
due to unforeseeable events.
Approaches that can be undertaken for the purpose of mitigation of the identified risks
Detailed analysis replicates that employee essentially operate to earn living and depend on
wages/salaries. Therefore, they frame decisions according to the own interests. In addition to
this, managers participate in the process of appeasement of the chief executive officers and
make sure removal of any kind of potential threats to the position. Basically, this represents
that diverse players engaged often make efforts to promote procedure of identification of
diverse players of a corporation (Whittington 2016). This is within a specific corporation who
do not devise decision by taking into account best interests of corporations. In particular, this
particular information needs to be presented to different stakeholders of the business concern.
Nevertheless, it can be considered to be easier said than undertaken since specific players are

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exceedingly adept in manipulation of truth as well as persuasion others that they are correct.
In essence, this opinion can be supported by different other scholars. There are also other
prior scholars who support the opinion that executives having ability to set on specific
procedures of arriving at decisions given the fact that interests of the company are very
significant. Ward and James (2015) mention that individuals framing best decisions need not
cover up anything and proper business governance is inevitably the mode of conversion of a
high-quality business concern into a huge concern. Nonetheless, in the current situation, the
recognized business enterprise does not always get involved by simple detection of both
executives and non-executive administrators.
Furthermore, it can be hereby stated in this context that situations also get altered. Business
pressures also get escalated and appeal of self-interest is also inescapable. Considering the
importance of the business enterprise, this can be hereby stated that there is obligation for a
vigorous together with inclusive method and arrangement of continuous watchfulness.
Particularly, continuous watchfulness has the need to shed light on different ways of arriving
at specific decisions particularly in the best interests and necessity of corporation. Caparrós et
al. (2017) says that corruption can be regarded as an adverse influence that affects economic
development of a specific nation. In this context, preventive vigilance can aid in the process
of decreasing corruption level and this can help in contributing positively towards proper
corporate governance. As correctly mentioned by Leong (2015), business corruption can
deter overall advance of a nation and produce disproportions in the method/scheme of
circulation of income along with wealth. This adds to the concept that decisions of expansion
plans of a business, speedy plans of expansions together with different unintentional
decentralization and might possibly direct the way towards corruption in case if suitable
management system are not instituted.

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Furthermore, speedy reply also needs to be carried out to mitigate risks encountered in
diverse circumstances that are not in line with interests of the project (Freeman et al. 2017).
Essentially, there are several academic scholars who have the same opinion that it is vital to
establish a particular system that can help in the procedure of quick and at the same time fast
managerial decision making process. In essence, this might probably take in developing
decisions based on discussions presented to directors (Scott 2015). Thus, it can be hereby said
that directors of firms have the necessity to set up a specific arrangement that can assist in
promoting fast procedures of administrative decision making. This study also presents the
fact that board or management of business also has requirement to be self-determining to
ensure maintenance of superior accountability with plan of additional augmentation of
business governance. Thus, the discussions presented above help in substantiating the views
presented by the Rankin along with other scholars.
Conclusion
In the end it can be said that the study aids in acquiring thoughtful insight as regards the roles
of corporate governance and substantiates the statement presented herein. This study also
validates the fact that good corporate governance can help in shaping strategic decisions that
are outlined as per the requirements and interests of the business concern. Furthermore, the
present study also sketches features of consistent along with reliable decision making
processes. In addition to this, this section also explicates illustratively corporate corruption
and ensuing corporate collapse together with specific approaches for mitigation of recognized
issues. Certain mitigation strategies are also mentioned herein for good corporate governance.

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References
Banerjee, B., 2014. COST ACCOUNTING THEORY AND PRACTICE. PHI Learning Pvt.
Ltd..
Baxter, W.T., 2014. Accounting theory (Vol. 3). Routledge.
Beattie, V., 2014. Accounting narratives and the narrative turn in accounting research: Issues,
theory, methodology, methods and a research framework. The British Accounting
Review, 46(2), pp.111-134.
Caparrós, A., Oviedo, J.L., Álvarez, A. and Campos, P., 2017. Simulated exchange values
and ecosystem accounting: Theory and application to free access recreation. Ecological
Economics, 139, pp.140-149.
Dyckman, T.R. and Zeff, S.A., 2015. Accounting research: past, present, and
future. Abacus, 51(4), pp.511-524.
Freeman, R.J., Shoulders, C.D., McSwain, D.N. and Scott, R.B., 2017. Governmental and
nonprofit accounting. Pearson.
Leong, R., 2015. Structuring an undergraduate accounting theory course to enhance the
learning experience of Australian students: Preliminary findings.
Linsley, P., McMurray, R. and Shrives, P., 2016. Consultation in the policy process:
Douglasian cultural theory and the development of accounting regulation in the face of
crisis. Public Administration, 94(4), pp.988-1004.
MITCHELL, F. and NØRREKLIT, H., 2017. Introduction. In A Philosophy of Management
Accounting (pp. 15-34). Routledge.

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Mohammadi, S., 2015. Full development of the theory of accounting and
auditing. International Journal of Accounting and Economics Studies, 3(1), pp.7-9.
Otley, D., 2016. The contingency theory of management accounting and control: 1980–
2014. Management accounting research, 31, pp.45-62.
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Smith, M., 2017. Research methods in accounting. Sage.
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