The wave of corporate malfeasance has dominated the business news and attracted attention of a growing number of governments, regulatory bodies, professional organizations and legislators across the globe in recent years since collapses and scandals occurred at some famed multinational firms like Enron, WorldCom, Adelphia, and Tyco in U.S.A, HiH in Australia, Brenner Vulkari and Metatlgesellschaft in Germany, BCCI in the UK, Parmalat in Italy, even Qantas in NZ etc. These ongoing corporate events touched off by mentioned above have seriously impacted stock markets around the world and made investors generally skittish. Calls for corporate governance reform are reverberating throughout the world for the purpose of compromising weakened financial markets therefore restoring investor's confidence. In reality, 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 centers in Europe (Berglof, 1997).
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...