Corporate Governance
1.1 Introduction
Corporate governance has been the subject of numerous theoretical and empirical studies especially after the fraudulent reporting scandals such as Enron, World.com, Adelphia, and Parmalat.it has come to mean many things. Traditionally and at fundamental level the concept refers to corporate decision making and control, particularly the structure of the board and its working procedures, Hermes (1994). Jenifer (2002) defines corporate governance as a set of interlocking riles by which corporations, shareholders and management govern their behaviour. Private Sector Corporate Governance Trust (1994) referred to corporate governance as the manner through which the power of an organisation is exercised in the stewardship of the corporation’s total portfolio of assets and resources with the objective of maintaining and increasing shareholders value with satisfaction of other stakeholders in context of its corporate mission. The Organisation of Economic Cooperation and Development (OECD), (2004) provides the most authoritative functional definition of corporate governance: “Corporate governance is a system by which business corporations are directed and controlled. In each country, this is a combination of a legal system that sets some common standards of governance and systems of behaviour determined by the firms themselves.”
Given the importance of corporate governance practises, many analyses have been conducted in developed countries evaluating the relationship between corporate governance and financial performance. It has been characterised by ineffective boards of directors, weak internal controls, unreliable financial reporting, lack of adequate disclosure lack of enforcement to ensure compliance and poor audits. These problems are evidenced by unreported losses and understated liabilities.
A going concern is a business that functions without the threat for liquidation for the foreseeable future, usually regarded as at least 12 months. Going
Corporate governance has been the subject of numerous theoretical and empirical studies especially after the fraudulent reporting scandals such as Enron, World.com, Adelphia, and Parmalat.it has come to mean many things. Traditionally and at fundamental level the concept refers to corporate decision making and control, particularly the structure of the board and its working procedures, Hermes (1994). Jenifer (2002) defines corporate governance as a set of interlocking riles by which corporations, shareholders and management govern their behaviour. Private Sector Corporate Governance Trust (1994) referred to corporate governance as the manner through which the power of an organisation is exercised in the stewardship of the corporation’s total portfolio of assets and resources with the objective of maintaining and increasing shareholders value with satisfaction of other stakeholders in context of its corporate mission. The Organisation of Economic Cooperation and Development (OECD), (2004) provides the most authoritative functional definition of corporate governance: “Corporate governance is a system by which business corporations are directed and controlled. In each country, this is a combination of a legal system that sets some common standards of governance and systems of behaviour determined by the firms themselves.”
Given the importance of corporate governance practises, many analyses have been conducted in developed countries evaluating the relationship between corporate governance and financial performance. It has been characterised by ineffective boards of directors, weak internal controls, unreliable financial reporting, lack of adequate disclosure lack of enforcement to ensure compliance and poor audits. These problems are evidenced by unreported losses and understated liabilities.
A going concern is a business that functions without the threat for liquidation for the foreseeable future, usually regarded as at least 12 months. Going
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