Analysis of Corporate Governance Failures and Effective Solutions

This report provides a comprehensive analysis of corporate governance, specifically focusing on state-owned enterprises. It begins by exploring the reasons behind poor corporate governance in these entities, highlighting issues like unclear accountability and conflicting policy interests. The report then delves into the failures of existing corporate governance mechanisms, attributing them to factors such as lack of integrity, poor ethical leadership, and violations of corporate governance rules. It emphasizes the detrimental impact of these failures on organizational culture and performance. The core of the report proposes effective solutions to these problems. These include building a strong and qualified board of directors, clearly defining roles and responsibilities, fostering open communication among key leaders, implementing integrity and ethical practices, regularly assessing performance, establishing principled compensation decisions, and implementing effective risk management strategies. The report concludes by emphasizing the importance of corporate governance for organizational success and encourages the adoption of these solutions to ensure effective and ethical operations. This report is designed to help students with their assignments, and Desklib provides similar resources.

Running head: CORPORATE GOVERNANCE
Corporate governance
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CORPORATE GOVERNANCE
Table of Contents
Introduction..........................................................................................................................2
Reason for poor corperate governanace in state owned enterprise......................................2
Reasons for failure of existing corperate governance mechanisms.....................................2
Effective solution to these problems....................................................................................3
Conclusion...........................................................................................................................5
Reference list.......................................................................................................................6

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Introduction
Corporate governance in an organization is a set of rules which aids the organization in
doing their daily work. Corporate governance consists of all the various internal and external
factors which comes under the interests of the various stakeholders of the company which
includes the employees, customers, government regulators as well as the suppliers of an
organization. The board of directors of a company are the makers of the corporate governance
which aligns with the structure of the company. Some of the various processes which comes
under the corporate governance of the company are disclosure practices and the performance
measurement of the company (Khan, Muttakin & Siddiqui, 2013).
Reason for poor corperate governanace in state owned enterprise
Unclear accountability in the state owned enterprises is the main reason due to which
they are unable to implement stable corporate governance in their system. Accountability in the
state owned enterprises shows the inherence of various policy interest among them (Khan,
Muttakin & Siddiqui, 2013). This is the reason they are unable to implement a robust corporate
governance in them. State owned enterprises around the world must ensure that their leaders and
the managers are capable enough to ensure that a smooth implementation of corporate
governance will be carried out in the company (Yermack, 2017).
Reasons for failure of existing corperate governance mechanisms
There are a lot of aspects which can be attributed to the failure of the present corporate
governance in the modern business context. Some of these aspects are mainly lack of integrity in
the organisation, poor ethical leadership quality, fraud in the company and violating the
corporate governance rules. Most of the corporate governance rules makes the thing worse, and

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aids in creating a stable base on which more corruption in the company is bound to happen and
ultimately the corporate governance in the company fails. Lack of innovation and sustainable
methodology in organisations fails in creating a good culture in the workplace. Lack of corporate
culture in an organisation aids in hampering the implementation of better corporate governance
in the company. Lack of value based leadership in an organisation along with lack of ethical
leadership in the leaders and the managers of the organisation also leads to the hampering of the
implementation of better corporate governance in the country (McCahery, Sautner & Starks,
2016). The main contributors of the company mainly the leaders and the managers of an
organisation take care of the various problems and the company and ensure that the company is
functioning in a proper manner. When the leaders and the managers of the company fails to
implement their roles in a solidifying manner then there is failure in the implementation of
ethical corporate governance in the company (McCahery, Sautner & Starks, 2016). Effective
leadership quality and the implementation of the various ethical essentials in the company by the
board members of the company including the chairman of the company ensures that corporate
governance in a company does not fail (Samra, 2016).
Effective solution to these problems
To ensure that a strong corporate governance is implemented in a company the following
steps can be followed:
 Building a strong and elect a qualified board of directors is the first step which can be
followed to ensure that corporate governance in the company has been implemented in a
proper way (Samra, 2016). The board of the company must be containing members who
are well knowledgeable and know how to work in a proper way for meeting the mission
and vision of the company.

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 The roles and the various responsibilities of the leaders of the company must be clearly
explained so that they have a clear alienation with the functioning of the company
(Armstrong, Blouin, Jagolinzer & Larcker, 2015). The chairman of the company along
with the CEO and the various executive officers associated with the company must have
a clear communication with each other (Hermalin, 2014).
 Implementation of integrity and ethical deals must b implemented in a proper way so that
the board of directors of the company do not have the conflicts of the various interests
among them. This will be ensuring that the board of the company will be aiming in
improving the functioning of the company (Tricker & Tricker, 2015).
 The performances of the various leaders across the company must be assessed on a
regular basis which will be ensuring that the goals and the missions of the company will
be implemented in a proper manner (Claessens & Yurtoglu, 2013). A set of principled
controlled compensation decisions must be implemented by the company which will be
ensuring that the company will be attracting candidates who have innovative idea and
will be having the feeling that they will be benefitted from this company in the
future(Claessens & Yurtoglu, 2013).
 Effective risk management must be implemented by the company to ensure that they will
be functioning in a proper way (Hermalin, 2014). The board of the company will be
responsible for the implementation of the various strategic leadership across organization
and establish a risk tolerating policy which will be ensuring that the company will be
ready for any kind of problems which it might be facing in the future (Armstrong, Blouin,
Jagolinzer & Larcker, 2015).

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These are the various process and steps which must be kept in mind to ensure that an
effective corporate governance is instilled in the company and in future there will be no
hindrance in the effective working of it.
Conclusion
To conclude it can be said that corporate governance is an essential component of any
company and an effective implementation of it will be ensuring that a company will be working
in a proper way. State owned enterprises across the world must ensure that they are
implementing and constructing corporate governance in them in a proper way as it is very
important for them to survive in the present competition of the market. The various steps which
has been discussed for the implementation of an effective corporate governance can be followed
by any company around the world which will be helping them in the future.

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Reference list
Armstrong, C. S., Blouin, J. L., Jagolinzer, A. D., & Larcker, D. F. (2015). Corporate
governance, incentives, and tax avoidance. Journal of Accounting and Economics, 60(1), 1-17.
Claessens, S., & Yurtoglu, B. B. (2013). Corporate governance in emerging markets: A
survey. Emerging markets review, 15, 1-33.
Hermalin, B. E. (2014). Transparency and corporate governance. In Enterprise Law. Edward
Elgar Publishing.
Khan, A., Muttakin, M. B., & Siddiqui, J. (2013). Corporate governance and corporate social
responsibility disclosures: Evidence from an emerging economy. Journal of business
ethics, 114(2), 207-223.
McCahery, J. A., Sautner, Z., & Starks, L. T. (2016). Behind the scenes: The corporate
governance preferences of institutional investors. The Journal of Finance, 71(6), 2905-2932.
Samra, E. (2016). Corporate governance in Islamic financial institutions.
Tricker, R. B., & Tricker, R. I. (2015). Corporate governance: Principles, policies, and
practices. Oxford University Press, USA.
Yermack, D. (2017). Corporate governance and blockchains. Review of Finance, 21(1), 7-31.