One 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. Among, the Sarbanes-Oxley Act of 2002 signed by President George W. Bush in the United Sates is prominent to respond governance failures at foregoing firms in the USA and has major implications for the business and corporate governance system in the UK, Australia, New Zealand and other countries in the world.
Correspondingly, sets of corporate governance proposals designed to ensure the independence of directors, enhance corporate accountability and financial transparency, aim at increasing investor confidence have been approved by US organizations such as NASDAQ, The New York Stock Exchange (NYSE), and The Institute of Internal Auditors (IIA). Compared with other countries, despite no evidence of widespread poor corporate governance in New Zealand, the Securities Commission of New Zealand, in September 2003, released a public consultation process to set up a set of principles for corporate governance in New Zealand.
Current research has identified that corporate governance is a cohesive and dynamic process in which board directors or individuals make their best to maximise the shareholder's interests. While an effective board of directors is central to good corporate governance; and good corporate governance, in turn, is central to good corporate performance (Paredes, 2003). Therefore, to a company's...