A number of other major economies have however embraced the adoption of the enabling mode of governance and rejected the mandatory corporate governance. A number of differences exist between these two systems as outlined by Anand, (2005). Mandatory corporate governance is practiced in major states of the United States, a mandatory system provides guarantee that firms in this system will have to implement any reforms that market regulators put in place. This is contrary to the enabling governance where nothing guarantees a fair play and the enforcement of implementation of any changes. Enabling governance has the ability to ensure that there is compliance to regulatory mechanisms especially when it is implemented together with mandatory disclosure of organizations practices. Mandatory system is also slightly more costly to implement when compared to the enabling governance style (Anand, Milne, and purda, 2006). Mandatory corporate governance is majorly practiced in the United States while the United Kingdom practices the enabling kind of governance. Canada and Australia are other major countries that also practice the enabling kind of governance apart of the United Kingdom. The United States mandatory governance is however a blend of the two systems. In some states, companies are not compelled to adhere to the requirements but are required to make formal disclosure of the rules they have or have not adhered to. Firms that are cross listed in the United States are required according to the Sarbanes-Oxley act to submit their evidence of compliance to the mandatory governance regulation. The SOX regulation has a prohibition for ‘insider loans’ especially among companies listed under this act. Such companies must also ensure that they submit their balance sheets for each financial year (Anand, 2005). The mandatory corporate governance system of the United States also has a requirement for all companies listed under its stock exchange at the NYSE and NASDAQ. They are required to include independent directors in the management board of the firms; the same policies are also practiced in Canada. Firms are required to submit their compliance statuses through proxy to the provincial commissions who are also mandated to ensure that there is strict formulation and administration of the guidelines (McCahery and Vermeulen, 2010). Under the enabling system as practiced in the UK, compliance with corporate guidelines is voluntary. Only companies that are listed in the London stock exchange are obligated by law to submit their compliance in their annual reports. The system as practiced in the United Kingdom has been adopted in Australia with a few modifications on the reporting mechanisms. The UK system also applies incentives that are meant to make firms disclose their compliance information; disclosure of information in the enabling system depends on the sensitivity of the information. In situations where firms feel that their competitors may benefit from exposure, such firms have the right to withhold their compliance (Anand, 2005). Enabling systems is also known as voluntary governance system, this is majorly because of the free atmosphere that it creates for its firms. Firms in this system can either chose to disclose their information or not to be based on their reasons; this is the system which is practiced in the
Ethics, Corporate Governance and Social Responsible Investment Name University Course Instructor Date Section A A mandatory system of governance has strict rules that must be observed by all market players. Any firm that fails to adhere to these rules is fined according to the legal requirements…
This research aims to evaluate and present how effective corporate governance and social responsibilities have been in fostering the growth of the company in the highly competitive soft drinks industry. Corporate governance has been enforced by the shifting attention to high and risky profiles that have shifted the debate on corporate governance.
So, the scope of corporate governance is quite wide. In fact, corporate governance has its origin from a wide range of sources including stock exchanges and international organisations. There are certain commonly accepted principles pertaining to corporate governance.
Because of this sensitivity, the accounting profession had adopted a professional code of ethics for all members. People however believe a lot of reformist agenda had been thwarted by the vested interests of pro-corporate public policy makers
Various business and production companies deal in products that are of use to the public in one way or the other. The companies also employ different individuals to carry out their operations. It is desirable that the organizations should show some concern for the well-being of the individuals that are closely affected by its products and activities.
The author of this paper assuming that in addition of adapting the corporate governance principles, it is important for International Extractive Industry to engage in various corporate social responsibility initiatives. If the set principles of governance are not adhered to, unethical activities may arise.
Browne and Milgram 2009 noted that as businesses operations become complex and competition stiffer day by day, many organisations have resorted to utilisation of CSR in order to develop and maintain competitive advantage. Nevertheless, in the process of developing competitive advantage, some organisations fail to grasp the real meaning of CSR.
Considering the contemporary information driven world, it is next to impossible for any business to hide skeletons in its cupboard. Conscientious and well informed citizens do appreciate and prefer to invest in businesses that are run on sound ethical guidelines.
hile external stakeholders are shareholders, debtholders, suppliers, customers, trade creditors, and communities affected by the activities of the organisation. So, the scope of corporate governance is quite wide. In fact, corporate governance has its origin from a wide range of
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