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Enron, World Com, Hih, Qantas Nz, Etc Corporate Governance Failure!

3289 words - 14 pages

IntroductionOne of the very first concerns of the recent international publicity has been stressed in the context of corporate governance failure since collapses and scandals occurred at some famed multinational firms like Enron, WorldCom, HiH, Tyco, Adelphia etc. over the past 2 years. These corporate events that took place in the range of worldwide has made globe stock markets suffered and seriously impacted the world's financial foundations and investors' confidence. To seek solutions of the crisis, a series of reforms by governments, professional bodies, policy makers, and legislators have been launched for the purpose of compromising investor confidence and weakened financial markets. ...view middle of the document...

Therefore, to a company's success, the quality of corporate governance and the effectiveness of the board of directors are critical; in the contrast, poor corporate governance and a dysfunctional board would be responsible for the failure of the business.The view that the recent multinational company's collapses and corporate governance reforms will be discussed in the United States, Britain, Australia and New Zealand context in this paper. In response to these issues, I will highlight board contributions to the performance of the company with the involvement of board role on the implications of governance failures. Discussion will also be given to increasing board effectiveness by means of strengthening monitor function of the board, enhancing the independence of directors and auditors to implement integrity, accountability and transparency. Furthermore, I will also identify New Zealand's responses after the collapses of Enron etc. with analyses and suggestions around the corporate governance under the current New Zealand Companies Act. Finally, the paper will conclude that New Zealand is facing a two-side status quo that is inevitable involvement in eddy of corporate governance failure but no fall into too much so that a balance between implications with governance code and effective board should be achieved.DiscussionCorporate governance failure as one of the hottest topic in recent business world owing to the collapses and scandals of many business magnets (e.g. Enron, WorldCom, HIH, Qantas NZ, etc.) has attracted a number of concerns of governments, organisations and academics across the world. In the spite of the diversity of reasons of these collapses occurred, the failure of corporate performance must be one of them. According to Paredes (2003), good corporate performance centers with good corporate governance and an effective board is the core of the latter. Corporate governance concerns all factors that govern the way companies are run. Its system encompasses the system of laws, codes and regulations that influence and constrain company behavior, including setting the objectives of a company and defining the rights and roles of different participants in an organization- the shareholders, the board of directors, employees and other stakeholders-and the relationships between them (the Internet 2003a). Obviously, this system is to safeguard the rights and interests of shareholders and other stakeholders-one of the most important role of the board, like Healy (2002) stated that a fundamental fiduciary responsibility of managers and boards is to create economic value for their shareholders. Unfortunately, once this system is broken, the corporate governance of the company will fail. Enron scandal could be a very typical example. In the United States, the Enron's board failed to safeguard its shareholder interest by allowing Enron management to engage in high-risk accounting, inappropriate conflict of interest transactions, excessive...

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