...Corporate Ownership & Control / Volume 2, Issue 2, Winter 2005 РАЗДЕЛ 3 УГОЛОК ПРАКТИКА SECTION 3 PRACTITIONER'S CORNER INVESTORS TRUST AFTER PARMALAT SCANDAL: THE ROLE OF CORPORATE GOVERNANCE Giovanni D’Orio Giovanni D’Orio, Department of Economics and Statistics, University of Calabria – Rende (CS) Italy. Contact: gio.dorio@unical.it 1.1. Introduction The collapse of the Parmalat food empire reveals a troubling aspect about Italian capitalism - the lack of effective financial control over its family-owned companies. But was Parmalat scandal a pure problem of corporate governance or was it simply a “fraud”? Bearle and Means (1932 pg. 6) famously explained: “The separation of ownership from control produces a condition where the interests of owner and of ultimate manager may, and often do, diverge ....”. Is this the case? Were the people who invested in bonds and shares of Parmalat savers, investors or what? Which was the role played in the story by Auditors, CONSOB and Bank of Italy? This paper analyse the current situation of the Italian corporate governance and saving system in a critical view trying to find an explanation to the previous questions. 1.2. Corporate Governance and the legislative decree 19/01/03nr. 6: the alternatives The Italian system of corporate governance does not fit in either of the categories of the well-known distinction between bank-based and stock exchange 102 based systems. Instead, it can be ranked among the ...
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... The Sarbanes-Oxley Act was declared a law in 2002 (Orin, 2008). The primary purpose of this new law was to convey meaning to restoring faith in corporate America’s financial endeavors (Orin, 2008). The Sarbanes-Oxley Act was meant to aid and protect investors, who suffered extreme losses because of corporations having poor financial performances, which was the case before the law was enacted (Orin, 2008). Distinctively, the Sarbanes-Oxley Act was meant to concentrate on accounting fraudulence by holding corporations accountable for disclosing accurate and reliable financial records. The Sarbanes-Oxley Act was also meant to ensure corporate executive leadership acted ethically throughout daily business (Orin, 2008). Assess the Effectiveness of SOX Legislations Key Ethical Components of the SOX To efficiently and effectively implement the Sarbanes-Oxley Act corporations need to broaden their views and focus on the greater purpose of the Sarbanes-Oxley Act. Beasley and Hermanson (2009) believe to accomplish this corporate leadership need to focus on the following: • Value the purpose of the Sarbanes-Oxley Act. • Comprehend the effect of fraudulence behavior. • Concentrate on ethical attitudes pertaining to rationalizing fraudulence behavior. • Making the Sarbanes Oxley Act the foundation to compliance to improve governance and control. • Investigate and implement enterprise risk management (para 5). Value the purpose of the Sarbanes-Oxley...
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...Student ID: 082168461 The impact of the Sarbanes-Oxley Act on Corporate Governance and US Companies An examination to determine the impact of the Sarbanes Oxley Act, the costs and benefits of its implementation and how it has affected Corporate Governance and US Companies. Table Of Contents 1. Abstract...................................................................................................................... 4 1.1 Introduction ................................................................................................. 4 1.2 Methodology................................................................................................ 4 1.3. Limitations .................................................................................................. 5 1.4 Analysis and conclusion .............................................................................. 5 1.5 Further research ........................................................................................... 6 2. Literature Review: An Overview of Corporate Governance ..................................... 6 2.1 United Kingdom ........................................................................................ 14 2.2 Self-regulation prior to SOX ..................................................................... 18 3. Literature Review: The SOX Act ................................................................ 19 3.1 Enron, the trigger to SOX? ....................................
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...Ethics Case Halliburton Plc. & Washington Inc.: The Power of Politics in Corporate Business Success As a general rule, correcting market failures is best left to the government. Businesses cannot be trusted to get it right, partly because they lack the wherewithal to frame intelligent policy in these areas.[i] Free-market economist Adam Smith (1723-1790) states that if self-interested people are left alone to seek their own economic advantage, the result, unintended by any one of them, will be greater advantage for all. He maintains that government interference is not necessary to protect the general welfare.[ii] MBA 8111 Business, Government, and Society Introduction Governments have become the black box for corporate business success around the world. This paper will discuss the close relationship between business and government, using Halliburton as main examples throughout the case. Halliburton has often been perceived negatively by the public and has become a favorite target by Democrats for critics about conflicts of interest, undue corporate influence, hidden motives, accounting fraud, bribery, bilking the government, tax evasion, and trading with rogue nations.[iii] Its name has become synonymous with political cronyism.[iv] The current U.S. Vice-President Dick Cheney, who previously held the CEO of Halliburton from 1995 to 2000, is criticized to facilitate the government contracts to be available to the company even though he...
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...Paper 5 The Recovery of Trust: Case studies of organisational failures and trust repair BY GRAHAM DIETZ AND NICOLE GILLESPIE Published by the Institute of Business Ethics Occasional Paper 5 Authors Dr Graham Dietz is a Senior Lecturer in Human Resource Management and Organisational Behaviour at Durham University, UK. His research focuses on trust repair after organisational failures, as well as trust-building across cultures. Together with his co-author on this report, his most recent co-edited book is Organizational Trust: A cultural perspective (Cambridge University Press). Dr Nicole Gillespie is a Senior Lecturer in Management at the University of Queensland, Australia. Her research focuses on building, repairing and measuring trust in organisations and across cultural and professional boundaries. In addition, Nicole researches in the areas of leadership, teams and employee engagement. Acknowledgements The authors would like to thank the contact persons in the featured organisations for their comments on an earlier draft of this Paper. The IBE is particularly grateful to Severn Trent and BAE Systems for their support of this project. All rights reserved. To reproduce or transmit this book in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieval system, please obtain prior permission in writing from the publisher. The Recovery of Trust: Case studies of organisational...
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...TERM PAPER: Fraud Prevention: Are Existing Deterrents Working Kevin B. Hoover ACC 630 – Professor Sheila Vagle University of Maryland University College Introduction I recently read the following quote posted by an anonymous person on Facebook: “I had ADHD when I was a kid too, but when I saw my father taking off his belt, I was healed”. I share that not just because it is true in my case, but because it is a fairly humorous and spot on example of a deterrent. Deterrence is a critical element of the effort to prevent a particular behavior. People have to have a reason not to act that way. When I was a kid, I didn’t know what a deterrent was, but I sure knew that the possibility of a whipping was reason enough not to lose my mind. What deters people working in the business and financial worlds from committing fraud? The Sarbanes-Oxley Act of 2002 perhaps? Fear of prosecution? One would hope so, but it is certain that the answer is more complex than that. In fact, it could be argued that the answer is nothing deters people from committing fraud because fraud is still happening. Therein, lies the aim of this paper. This paper will take a look at financial fraud and the deterrents in place since 2002, and offer the opinion that the deterrents are not working. A history of the issues as they relate to this opinion will be given. Further, recommended solutions to the perceived problems will be put forth. It is worthy of mention that deterrence and prevention...
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...Recovery of Trust: Case studies of organisational failures and trust repair BY GRAHAM DIETZ AND NICOLE GILLESPIE Published by the Institute of Business Ethics Occasional Paper 5 Authors Dr Graham Dietz is a Senior Lecturer in Human Resource Management and Organisational Behaviour at Durham University, UK. His research focuses on trust repair after organisational failures, as well as trust-building across cultures. Together with his co-author on this report, his most recent co-edited book is Organizational Trust: A cultural perspective (Cambridge University Press). Dr Nicole Gillespie is a Senior Lecturer in Management at the University of Queensland, Australia. Her research focuses on building, repairing and measuring trust in organisations and across cultural and professional boundaries. In addition, Nicole researches in the areas of leadership, teams and employee engagement. Acknowledgements The authors would like to thank the contact persons in the featured organisations for their comments on an earlier draft of this Paper. The IBE is particularly grateful to Severn Trent and BAE Systems for their support of this project. All rights reserved. To reproduce or transmit this book in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieval system, please obtain prior permission in writing from the publisher. The Recovery of Trust: Case studies of organisational failures and trust repair Price...
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...79C FINANCIAL REPORTING QUALITY AND CORPORATE GOVERNANCE: THE PORTUGUESE COMPANIES EVIDENCE Cristina Gonçalves Góis Senior Lecture Instituto Superior de Contabilidade e Administração de Coimbra Instituto Politécnico de Coimbra Área temática: C) Dirección y Organización Palabras clave: gobierno corporativo; la calidad contable; información financiera; 1 FINANCIAL REPORTING QUALITY AND CORPORATE GOVERNANCE: THE PORTUGUESE COMPANIES EVIDENCE. ABSTRACT The main objective of this paper is to analyze the relationship between the composition and characteristics of corporate governance on the financial reporting quality of Portuguese companies. The major reference case studies on the relationship between corporate governance and the financial reporting quality are not validated by the results obtained. The results show that the board composition changes and its degree of independence do not produce any influence on the quality of the accounting information. Our study shows that although the main international guidelines relating to the rules of good governance have been followed closely by Portuguese institutions, the actual implementation of these rules did not occur. 2 1. INTRODUCTION The aim of this paper is to contribute to the study of the influence of the type of corporate governance on the financial reporting quality in countries with a tradition of continental accounting. Despite the profuse literature about this topic, adapted to Anglo-Saxon...
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...-M. Debt and the Jubilee: Pacing the Economy Finance & the Common Good/Bien Commun, Supplement no. 1, 1999 Dembinski, P. H. (leading contributor) Economic and Financial Globalization: What the Numbers Say United Nations, Geneva, 2003 Enron and World Finance A Case Study in Ethics Edited by Paul H. Dembinski Carole Lager Andrew Cornford and Jean-Michel Bonvin in association with the Observatoire de la Finance Selection, editorial matter and Chapters 1, 2 and 16 © Observatoire de la Finance Remaining chapters © contributors 2006 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1T 4LP. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents...
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...Five Reasons to Discharge Contracts | Contracts are a means to an end, not an end in themselves. They represent a promise to do something or to refrain from doing something. When both parties to a contract fulfill their promises, the contract has served its purpose and is terminated or discharged.However, if one or more of the parties to a contract are unable to perform what they promised and there is no legal excuse for this inability to perform, there is a breach of the contract. There are five valid reasons to terminate, or discharge, contracts. These five reasons are discussed below.1. Material breach Material breach occurs when one party to a contract doesn't fulfill the essential terms of the contract. It is so-called because it occurs when the contract is not met in a material way. It goes against the terms of the contract and has a material impact on the other party. This discharges the other party from its contractual obligations. Consequently, the other party may have grounds to sue for damages.2. Minor breach Minor breach occurs when the essential terms of the contract have been fulfilled but the other party is inconvenienced rather than suffering loss or damages. The nonbreaching party still has contractual obligations, but could suspend performance of the contract.3. Anticipatory breach Anticipatory breach occurs if one of the parties to the contract states, before the breach occurs, that it will not be able to fulfill its contractual obligations. Anticipatory...
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...Bonvin, J.-M. Debt and the Jubilee: Pacing the Economy Finance & the Common Good/Bien Commun, Supplement no. 1, 1999 Dembinski, P. H. (leading contributor) Economic and Financial Globalization: What the Numbers Say United Nations, Geneva, 2003 Enron and World Finance A Case Study in Ethics Edited by Paul H. Dembinski Carole Lager Andrew Cornford and Jean-Michel Bonvin in association with the Observatoire de la Finance Selection, editorial matter and Chapters 1, 2 and 16 © Observatoire de la Finance Remaining chapters © contributors 2006 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1T 4LP. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2006...
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...acknowledgement to all who have contributed to this work in some form: writing this thesis would have otherwise been like swimming through mud. To my supervisor, Professor Andreas van Wyk, thank you for your leadership, patience, and academic skill in guiding me through the research process. To Adéle Mulder and Charl Marais, thank you for your continuous insight and perspectives, both academic and otherwise. And finally to Hilda and Gerrie Steyn, who have been absolutely crucial throughout all my years of study, thank you for your indispensable support, in all its forms. iv SUMMARY The worldwide increase of corporate failures on the scale of Enron and WorldCom has sparked a renewed international trend of corporate governance review. With the external company auditor blamed at least in part for many corporate failures, corporate governance reform also necessitates a review of the statutory regulation of the company auditor. In particular, the lack of auditor independence when auditing clients has been under the legislator’s spotlight. The problems associated with unregulated or poorly regulated auditors are well...
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...FUNDAMENTALS OF BUSINESS LAW & ETHICS INTRODUCTION TO CONTRACTS What is the definition of a contract? a promise that the law will enforce 4 Parts of a Contract Agreement: one party must make a valid offer, and the other party must accept it. Consideration: there has to be bargaining that leads to an exchange between the parties. Legality: the contract must be for a lawful purpose. Capacity: the parties must be adults of sound mind. Describe the various types of contracts. bilateral: BOTH parties make a promise. This is the most common and is used for services, sale of goods and almost anything else. A promise for a promise... unilateral: ONE party makes a promise the the other party can accept only by doing something. This is a less common contract. express: In an express contract the two parties explicitly state all important terms of their agreement. This is the majority of contracts. implied: In an implied contract, the words and conduct of the parties indicate the intended agreement. This is less common. executory: one or more parties has not fulfilled obligations executed: all parties have fulfilled their obligations valid: satisfies all of the law's requirements unenforceable agreement: the parties intend to form a valid bargain but a court declares that some rule of law prevents enforcing it voidable: the law permits one party to terminate the agreement void agreement: neither party can enforce, usually because the purpose of the deal is illegal or...
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...Corporate Governance Blueprint 2011 Towards Excellence in Corporate Governance Suruhanjaya Sekuriti Malaysia 3 Persiaran Bukit Kiara Bukit Kiara 50490 Kuala Lumpur Malaysia Tel: 603-6204 8000 Fax: 603-6201 5078 www.sc.com.my Copyright © July 2011 Securities Commission Malaysia All rights reserved. No part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted in any form or by any means (graphical, electronic, mechanical, photocopying, recording, taping or otherwise), without the prior written permission of the Securities Commission Malaysia. Perpustakaan Negara Malaysia Corporate governance blueprint 2011 : towards excellence in corporate governance Bibliography : p. 77 ISBN 978–983–9386–67–7 1. Corporate governance--Malaysia. 2. Industrial management. 1. Suruhanjaya Sekuriti Malaysia. 658.4009595 Cataloguing-in-Publication Data This book is printed using eco-friendly recyclable and bio-degradable paper CONTENTS FOREWORD BY MINISTER OF FINANCE II, MALAYSIA MESSAGE FROM CHAIRMAN OF THE SECURITIES COMMISSION MALAYSIA INTRODUCTION CHAPTER 1 v vii 1 5 SHAREHOLDER RIGHTS CHAPTER 2 13 ROLE OF INSTITUTIONAL INVESTORS CHAPTER 3 21 THE BOARD’S ROLE IN GOVERNANCE – – – – ROLES AND RESPONSIBILITIES INDEPENDENCE OF THE BOARD COMPOSITION OF THE BOARD COMMITMENT OF BOARD MEMBERS 43 CHAPTER 4 DISCLOSURE AND TRANSPARENCY CHAPTER 5 53 ROLE OF GATEKEEPERS AND INFLUENCERS CHAPTER 6 61 PUBLIC AND...
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...Daniel G. Neely ABSTRACT: This instructional case provides auditing students an opportunity to examine an interesting real-life embezzlement and financial statement fraud occurring at a publicly traded company in the post-Sarbanes-Oxley (SOX) era. The case focuses on independent auditors’ and senior management’s reporting responsibilities related to internal control over financial reporting involving smaller public companies (nonaccelerated filers). While all public companies are subject to external auditor and management attestation on the effectiveness of internal control over financial reporting following SOX, the Securities and Exchange Commission (SEC) granted nonaccelerated filers numerous extensions for the effective date of required auditor attestation. In 2010, President Obama signed legislation to permanently exempt nonaccelerated filers from auditor attestation. The case also highlights inherent risk assessments by the independent auditor when one individual holds multiple C-level titles (Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, etc.) within the organization concurrent with membership on the board of directors, and requires students to recommend internal control policies and procedures designed to prevent or detect the embezzlement. Keywords: embezzlement; fraud; internal control over financial reporting; SarbanesOxley; nonaccelerated filers. INTRODUCTION M ilwaukee, Wisconsin-based Koss Corporation’s (Koss) founder...
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