ACC30008 - Corporate Governance: Decision-Making, Ethics, and Collapse

This report provides an in-depth analysis of corporate governance and its influence on strategic decision-making within organizations. It explores the critical role of corporate governance in ensuring decisions align with the best interests of the business, while also addressing the importance of swift and effective responses to managerial challenges. The report delves into the relationship between ethical lapses in decision-making and corporate collapse, highlighting the need for constant vigilance and transparency. Drawing upon agency theory, the analysis emphasizes the fiduciary duties of directors and the importance of balancing profit maximization with long-term sustainability. Furthermore, the report examines the impact of trust and dependable information on achieving competitive advantage. The study concludes by advocating for robust corporate governance frameworks that promote ethical decision-making, accountability, and swift remedial actions to safeguard against corporate corruption and collapse.

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

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Executive Summary
The current study elucidates in detail about the roles of corporate governance that can help in
providing strategic directions of decision making that in turn can work in best interests of
business concern. This segment also illustrates in detail about the importance of decision
making by the management of firms that can accelerate swift action and can be considered to
be remedial actions by various managerial situations that are not as per the best interests of
the business concern.

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Table of Contents
Introduction and Purpose...........................................................................................................3
Consistent and reliable corporate decision making....................................................................4
Approaches for mitigation of the identified concerns................................................................7
Conclusion..................................................................................................................................9
References................................................................................................................................10

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Analysis of the article titled Corporate Decision-Making, Corporate Collapse and
Inefficiency penned by Jeremy Pearce Dr
Introduction and Purpose
The study at hand intends to analyse specific roles of corporate governance that is to make
certain that strategic directions are framed in best interests of business concern. The current
research paper also put forward the fact that swift response needs to be undertaken to remedy
various managerial circumstances and activities that are not in conformity with the best
interests of the corporation. Moving further, the study at hand also presents way outs that can
help the corporation to move forward reliably.
Corporate governance is the system of rules, practices and processes by which a firm is
directed and controlled (Scott 2015). Corporate governance essentially involves balancing the
interests of a company's many stakeholders, such as shareholders, management, customers,
suppliers, financiers, government and the community. Since corporate governance also
provides the framework for attaining a company's objectives, it encompasses practically
every sphere of management, from action plans and internal controls to performance
measurement (Singleton-Green 2016)
Consistent and reliable corporate decision making
As mentioned in the given article companies can be said to be a nexus of decision. The
quantum of each day’s decision making either moves the business enterprise forward
sometimes in their best interest, to the rear from the best interests or else leaves the
corporation in a neutral position in association to the best interests. As suggested by Jones
(2015), a good decision in a specific moment might not a good division in the following
moment owing to altering variables. As a consequence, constant vigilance can be considered

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to be imperative. Successful corporations in the long term period are the ones that frame
better economic decisions in comparison to other competitors. There is no corporation that is
resistant to corrupt decision making (Oldroyd et al. 2015). In competitive markets, optimum
performance is relative and not absolute provided various complexities engaged in the
process of appropriate decision making.
In addition to this, the viewpoints presented in the current article state that optimal decision
making can be said to be intricate and a multifaceted advance to governance of decision
making is necessary. In essence, this necessarily includes a combination of various targeted
directive, different internal values, moral based decision making, leaders with moral values,
rigorous procedure of selection for hiring employees, zero tolerance for bad decision making,
flat framework dominated by various democratic procedures and genuine empowerment to
confront decision making (Susilawati et al. 2016). Therefore, there are certain combinations
of different elements for arriving at proper decision making,
The current article draws reference to agency theory that indicates towards fiduciary duties
that are essential to avert the propensity of the agent to engage in the process of self dealing.
It can be seen that in the corporate world, this fiduciary duties are inevitably protected in
regulations and reinforced with supplementary provisions to make certain that directors can
frame decisions chiefly in the best interests of the business concern (Henderson et al. 2015).
Again, this is juxtaposed against the setting of maximizing profits as well as returns for
shareholders that is necessarily analysed within the perspective of short term period.
The study at hand mentions that the provided the situational nature of decision making, it is
quite easy to understand the reason behind failure of conventional approaches to regulation at
the time of competing to be responsive when diverse directors are encountered with the
stimulating combination of instantaneous pressures of business combined with the tempt of

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self-interest. It is because of this dependence on only reporting can be said to be inadequate
(Williams 2014). The article at hand hereby stresses on the fact that the advent of constant
disclosure and augmented emphasis on materiality that can help in development of better
environment for decision making. In this connection it can hereby be mentioned that these
approaches of constant disclosure can facilitate the process of, making good sense as regards
business decision and firms have the need to stick to these approaches. Basically, the
inclusion of materiality of stakeholders along with constant disclosure in the framework for
governance cannot replace good decision framing (Dodd 2017).
In addition to this, the current research study at hand also sheds light on the trust factor in this
regard. As per the current study, trust can be considered as the definitive currency of
attainment of success in various market driven economies and fundamentally trust can be
enhanced through dependable information from diverse remarkable sources. In essence,
business enterprises that undertake proactive advances to produce trust by means of enhanced
transparency of decision making processes can acquire competitive advantage (Tricker and
Tricker 2015). This does not necessarily call for an external structure of reporting or else
processes of accounting that can cost the business enterprise both time as well as money.
Nonetheless, this does not indicate towards the fact that business enterprises do not have the
need to report, it is only that reporting process alone cannot prove to be a substitute for proper
decision making. Bearing in mind the above mentioned fact, it can be said that consistent as
well as dependable decision making can help business enterprises to operate faster and create
innovative ways of expressing the manner and the reason behind why the firms can be trusted
without any kind of external influence (Dimopoulos and Wagner 2016).
Corporate Corruption

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As per the given article, corporation can be regarded as something spoiled. Consequently, any
kind of imperfect decision that is not in the best interest of the corporation can be referred to
as corrupt decision. Analysis of the given article reveals the fact that one particular economic
decision can be regarded as the first decision in the way towards corporate collapse.
Fundamentally, all corporate collapses start with ethical lapse in one decision that is
frequently followed by attempts to mask poor decisions initially (Armstrong et al. 2015). It
can be hereby further added that each corrupt decision that does not direct the way towards
corporate collapse is inefficient when considered in association to optimum performance of
company. Du Plessis et al. (2018) suggest that decisions framed by imperfect individuals are
effectively prone to irrational, emotional else wise self-interested decision making.
Essentially, this might perhaps not be in the best interest of the business concern. Individuals
are intrinsically flawed, as a result, corrupt decision making can be considered to be a norm
and not exclusion.
Corporate Collapse
As mentioned in the current article, corporate collapse necessarily begins with the board of
the firm and is related directly to different players involved in the process. Here the author is
of the view that all business enterprises suffer inefficiencies owing to policies set by the
management. The study further adds that it can be witnessed in several cases that business
concerns necessarily become de-facto fiefdoms. Essentially, decision making revolve around
specific information that necessarily feeds the ego as well as belief system of the entire
management, thereby limiting bounded consistency. Again, studies conducted by various
other scholars also substantiate the fact that poor strategic decisions can direct the way
towards poor outcomes. Breitbarth et al. (2015) suggest that failure is not necessarily owing
to unforeseeable incident. Primarily, the company that has failed to actually know about the
state of affairs, however chose not to act in this regard.

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Approaches for mitigation of the identified concerns
Thorough evaluation reveals that employees necessarily operate to earn their living and
depend on their salaries. Thus, they frame decisions as per their own interests. Again,
managers engage in appeasement of CEO s and make certain removal any potential threats to
their positions. As such, this replicates the interests of the managers and not that of then
business enterprise. This in actual fact shows that different players involved often attempt to
avert heavy lifting and fail to work in the best interests of the company (Agrawal and Cooper
2017). The given article proposes that good corporate governance thus has the need to
facilitate the process of recognition of different players of a firm within an organization who
do not frame decision by taking into consideration the best interest of the business
enterprises. Particularly, this specific information has the need to be made available to
various stakeholders of the corporation. However, it is easier said than done as certain players
are extremely adept in manipulating truth and persuading others that they are right. This view
is also supported by other scholars as well. Many other scholars uphold the view that
executives with the potential to deliver on the processes of decision making keeping in mind
the interests of the company are important. Larcker and Tayan (2015) assert that the ones
framing best possible decisions need not hide anything and good corporate governance is the
way of transforming a good company to become a great one. However, in this context,
Aguilera et al. (2015) argue that the identified concern does not get resolved by mere
identification of requisite executives as all executive officers are human beings.
In addition to this it can be mentioned in this regard, situations do alter, business pressure
escalates, and temptation of self-interest is also unavoidable. Keeping in mind the gravity of
the concern, it can be hereby mentioned that there is need for a robust along with
comprehensive scheme of constant vigilance. This constant vigilance is said to shed light on
processes of decision making particularly in the best interests of the company. As rightly put

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forward by Davies (2016), corruption is said to adversely influence economic development of
a particular nation and in this regard preventive vigilance can help in lessening overall level
of corruption and contribute positively towards proper governance. Scott (2015) put forward
the view that corruption can hinder overall development of a country and generate
inequalities in the system of income distribution as well as wealth. Scott (2015) further adds
that decisions of expansion of a business, swift plans of expansions along with various
unplanned decentralization and might perhaps lead to specifically corruption in case if fitting
control systems of management are not established. .
Moreover, swift response also needs to be undertaken to remedy situations that are not in line
with the best interests of the business concern. There are many other academic scholars who
agree that it is important to institute a specific system that can aid in the process of
facilitating swift and fast managerial decision (Singleton-Green 2016). This might perhaps
include framing decisions founded on discussions carried out with directors of a business
enterprise. Therefore, in this regard it can be hereby be mentioned that board of business
enterprises have the need to institute a specific system that can help in facilitating swift
process of managerial decision making. In this case, the board also need to be independent
enough to make certain higher accountability with the intention of further enhancing
corporate governance (Henderson et al. 2015).
Conclusion
The above mentioned study helps in gaining profound insight regarding the roles of corporate
governance that can shape directions of strategic decisions that are framed in best interests of
firms. In addition to this, the study at hand also outlines specific characteristic features of
consistent and reliable corporate decision making. Over and above that, this segment also
elucidates in detail about corporate corruption, corporate collapse along with approaches for

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mitigation of the identified concerns. This study highlights the fact that identification of
different players whose decisions are self directed and do take into consideration interests of
the companies as whole. Decisions made by this kind of individuals are said to affect the
strategic direction of decision making and direct the way towards poor corporate governance.
Subsequently, yet another mitigation strategy as mentioned in the study is the fall out of the
processes of identified of different players. Furthermore, other strategies of mitigation also
include constant vigilance of reports and swift response on the part of the company. Moving
further, the study at hand also presents way outs that can help the corporation to move
forward reliably.

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References
Agrawal, A. and Cooper, T., 2017. Corporate governance consequences of accounting
scandals: Evidence from top management, CFO and auditor turnover. Quarterly Journal of
Finance, 7(01), p.1650014.
Aguilera, R.V., Desender, K., Bednar, M.K. and Lee, J.H., 2015. Connecting the dots:
Bringing external corporate governance into the corporate governance puzzle. The Academy
of Management Annals, 9(1), pp.483-573.
Armstrong, C.S., Blouin, J.L., Jagolinzer, A.D. and Larcker, D.F., 2015. Corporate
governance, incentives, and tax avoidance. Journal of Accounting and Economics, 60(1),
pp.1-17.
Breitbarth, T., Walzel, S., Anagnostopoulos, C. and van Eekeren, F., 2015. Corporate social
responsibility and governance in sport:“Oh, the things you can find, if you don’t stay
behind!”. Corporate Governance, 15(2), pp.254-273.
Davies, A., 2016. Best practice in corporate governance: Building reputation and
sustainable success. Routledge.
Dimopoulos, T. and Wagner, H.F., 2016. Corporate Governance and CEO Turnover
Decisions.
Dodd, E.M., 2017. For whom are corporate managers trustees?. In Corporate
Governance (pp. 29-47). Gower.
Du Plessis, J.J., Hargovan, A. and Harris, J., 2018. Principles of contemporary corporate
governance. Cambridge University Press.

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Henderson, S., Peirson, G., Herbohn, K. and Howieson, B., 2015. Issues in financial
accounting. Pearson Higher Education AU.
Jones, S. ed., 2015. The Routledge companion to financial accounting theory. Routledge.
Larcker, D. and Tayan, B., 2015. Corporate governance matters: A closer look at
organizational choices and their consequences. Pearson Education.
Oldroyd, D., Tyson, T.N. and Fleischman, R.K., 2015. American ideology, socialism and
financial accounting theory: A counter view. Critical Perspectives on Accounting, 27,
pp.209-218.
Scott, W.R., 2015. Financial accounting theory (Vol. 2, No. 0, p. 0). Prentice Hall.
Singleton-Green, B., 2016. Discussion of “articulating accounting principles: Classical
accounting theory as the pursuit of ‘explanation by embodiment’”. Journal of Applied
Accounting Research, 17(2), pp.136-138.
Susilawati, M., Ludigdo, U., Irianto, G. and Baridwan, Z., 2016. Frame Value of Strategic
Management Accounting Based on The Balance of Tri Kaya Parisudha.
Tricker, R.B. and Tricker, R.I., 2015. Corporate governance: Principles, policies, and
practices. Oxford University Press, USA.
Williams, J., 2014. Financial accounting. McGraw-Hill Higher Education.