Corporate Governance: Failure, Scandals and Improvements
The feature of current corporate malfeasance prevailing currently has subjugated the business news and fascinated attention of an increasing number of governments, professional organizations, regulatory bodies, and legislators in the world since collapses, bankruptcies and scandals transpired at some globally popular multinational firms like Enron, Adelphia, ,and Parmalat in Italy. Professional bodies and legislators have made contributions to achieve this goal. For instance, in the United States, the president George W. Bush signed Sarbanes-Oxley Act of 2002 which is prominent to respond governance failures at foregoing firms of USA. At the meantime, a series of corporate governance proposals designed to ensure the independence of directors, enhance corporate accountability and financial transparency have been approved by US organizations such as NASDAQ, The New York Stock Exchange (NYSE), and The Institute of Internal Auditors (IIA). In Italy, in response to the pressure from recent Parmalat scandal, from the ongoing integration of European capital markets and from international, primarily U.S,
the new legislation has been launched aiming to strengthen the country's capital markets and competition with other centres in Europe (Alessandra, A1).
Corporate governance reforms regardless of in U.S, EU, Australia and New Zealand, do help to provide companies with guidelines of achieving better corporate governance so as to avoid repeat of collapses or financial scandals. On the other hand, it has been suggested that professional bodies and legislators have focused on the pathology of failure in governance rather than the board's real strategic contribution. Effective governance, as a dynamic, preventive process throughout sorts of levels from shareholders even to employees, must be achieved by effective board of directors as an effective board of directors is central to good corporate governance; and good corporate governance, in turn, is central to good corporate performance. Therefore, the...