transparency in corporate governance essay

The Illusion of Transparency in Corporate Governance pp 57–82 Cite as

Transparency Is (Full) Disclosure in Corporate Governance

Finn Janning 4 ,
Wafa Khlif 5 &
Coral Ingley 6
First Online: 30 January 2020

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Corporate disclosure and reporting of information has become synonymous with transparency which in discourses idealising its value is part of the rhetoric of good governance. This notion is overtly conveyed in principles and codes of corporate governance practice which have proliferated globally over the last three decades. The possibility for transparency to conceal more than is revealed is considered with regard to corporate communication of information, with the consequence that power and real knowledge of the corporate behavioural agenda remains in corporate hands. Philosophically, the paradoxical and unintended outcome is that corporations are constrained by the norm of transparency in developing authentic moral behaviour, while also exercising power and control since in the information society transparency does not, and indeed cannot, lead to revealing all. Transparency places greater emphasis on judging, or evaluating existing organisational processes than on assessment of (self-)learning processes based on what actually takes place when corporations make decisions.

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Janning, F., Khlif, W., Ingley, C. (2020). Transparency Is (Full) Disclosure in Corporate Governance. In: The Illusion of Transparency in Corporate Governance. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-35780-1_3

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Contributors

The Role of Financial Reporting and Transparency in Corporate Governance

Wayne R. Guay is the Yageo Professor of Accounting at The Wharton School of the University of Pennsylvania. This post is based on a recent article authored by Professor Guay; Chris Armstrong , Associate Professor of Accounting at Wharton; Hamid Mehran , Assistant Vice President at the Federal Reserve Bank of New York; and Joseph Weber , George Maverick Bunker Professor of Management and a Professor of Accounting at MIT Sloan School of Management.

In our article, The Role of Financial Reporting and Transparency in Corporate Governance ( Economic Policy Review , 2016), we review the recent corporate governance literature that examines the role of financial reporting in resolving agency conflicts among a firm’s managers, directors, and capital providers. We view governance as the set of contracts that help align managers’ interests with those of shareholders, and we focus on the central role of information asymmetry in agency conflicts between these parties. The general conclusion in this literature is that financial reporting is valuable because contracts can be more efficient when the parties commit themselves to a more transparent information environment.

We first survey the papers that argue that financial reporting can alleviate information asymmetries that would otherwise impair the efficiency of important governance mechanisms. Empirical studies have found that information transparency is positively associated with the proportion of outside directors on the board, the proportion of outside directors on the audit committee, and the proportion of outside directors with financial expertise. One interpretation of these findings is that financial reporting transparency reduces information asymmetry between insiders and outsiders, which is more conducive to outsiders (and directors with financial expertise). Several of the more recent studies in this area attempt to discern the direction of causality in the relation between information transparency and board structure: shareholders may choose to appoint more outside directors when the information environment is more transparent, or outside directors might be able to influence the information environment of the firm. (Note that these two hypotheses are not mutually exclusive and causality might operate in both directions.)

We also highlight the distinction between formal and informal contracting relationships, and discuss how both play an important role in shaping a firm’s overall governance structure and information environment. Formal contracts, such as written employment agreements, are often quite narrow in scope and are typically relatively straightforward to analyze. Informal contracts govern implicit multi-period relationships and allow contracting parties to engage in a broad set of activities for which a formal contract is either impractical or infeasible. For example, the complexity of the responsibilities and obligations of a firm’s chief executive officer make it difficult to draft a complete state-contingent contract with the board. Consequently, although some CEOs have formal employment contracts, these contracts are necessarily incomplete and relatively narrow in scope. Consequently, the board and the CEO develop informal rules and understandings that guide their behavior over time.

Another key theme of our survey is that a firm’s governance structure and its information environment evolve together over time to resolve agency conflicts. That is, certain governance mechanisms and financial reporting attributes work more efficiently within certain operating environments. Consequently, one should not necessarily expect to see every firm converge to a single dominant type of corporate governance structure or compensation contract, or adopt a similar financial reporting system. Instead, one should expect to observe heterogeneity in these mechanisms that is related to differences in firms’ economic characteristics. We argue that the corporate governance literature seems to be unduly burdened by the normative notion that certain governance structures can be categorically identified and labeled as “good” or “bad.”

Next, we extend our discussion to the governance of banks and other financial intermediaries. Unlike the governance of traditional firms, bank governance is likely to differ in important ways due to the existence of certain external monitoring mechanisms (e.g., regulatory oversight and capital constraints), which may either substitute for or complement internal mechanisms, such as the board. In particular, external monitoring mechanisms are likely to serve the interests of various public constituencies who expect safe and sound financial institutions. These objectives do not necessarily coincide with those of investors who demand performance, which necessarily entails taking risks. The incentives for information production are also different in banks. Policies such as living wills, the explicit prohibition against future bailouts, and annual stress testing can encourage voluntary disclosure by banks. However, at the same time, regulations such as the annual stress testing may reduce other parties (e.g., credit analysts) incentives for information production. We argue that closer examination of how managers, analysts and regulators interact to produce information about banks and financial institutions is a ripe area for future research.

Finally, we discuss five governance mechanisms that can facilitate the production of information and enhance the transparency of banks, which may also have implications for other institutions. First, separating the positions of CEO and board chair can improve the accuracy and timeliness of financial reporting, since board chairs have incentives to provide information that may help avert large losses to stakeholders. Second, identifying successors to replace key members of the executive management team, should the need arise, is likely to facilitate effective smoother transition and a more steady flow of credible information. Third, an incentive structure that rewards managers who share information—both good and bad—and cooperate with regulators could be established. Fourth, stronger peer assessment, board evaluation, and sharing this information with regulators might facilitate the replacement of ineffective directors. Fifth, bank creditors could take a more prominent role in demanding timely and accurate information, which could improve not only the efficacy and efficiency of their own monitoring, but also that of other interested stakeholders.

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Transparency and Corporate Governance

An objective of many proposed corporate governance reforms is increased transparency. This goal has been relatively uncontroversial, as most observers believe increased transparency to be unambiguously good. We argue that, from a corporate governance perspective, there are likely to be both costs and benefits to increased transparency, leading to an optimum level beyond which increasing transparency lowers profits. This result holds even when there is no direct cost of increasing transparency and no issue of revealing information to regulators or product-market rivals. We show that reforms that seek to increase transparency can reduce firm profits, raise executive compensation, and inefficiently increase the rate of CEO turnover. We further consider the possibility that executives will take actions to distort information. We show that executives could have incentives, due to career concerns, to increase transparency and that increases in penalties for distorting information can be profit reducing.

The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.

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17 Corporate Governance and Optimal Transparency

Tom Berglund, Professor of Applied Mathematics and the Theory of the Firm at the Department of Economics, Hanken School of Economics, Helsinki, Finland.

Published: 05 December 2014
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This chapter explores the link between corporate governance and transparency. It begins by discussing definitions of corporate governance and transparency and goes on to review the literature on their relationship, covering also research on information disclosure. It then introduces a stylized model for the interrelationship between corporate governance and transparency. In key position is the board which is assumed to safeguard maximization of the long-run value of the firm’s equity in shareholders’ interests. Transparency is analyzed from shareholders’ point of view. The chapter highlights why increased transparency may reduce shareholder value and thus to a varying degree will be substituted with corporate governance mechanisms.

17.1 Introduction

Corporate governance and transparency have both played a prominent role in the discussion of how to avoid the types of problems that led the world into the financial crisis in 2008–2009. Both concepts convey the impression that they stand for something desirable, something that a well functioning economic system should promote. However, it is an open question if good corporate governance automatically leads to higher transparency. Some researchers believe that they go hand in hand, so that by promoting one, the other objective will also be promoted, while other researchers see them as substitutes in the sense that lack of transparency will increase the returns on investments in better governance.

The relationship between corporate governance and transparency will naturally depend on how we define the two key concepts. Thus the definitions of these two concepts is discussed in Section 17.2 . How these issues have been covered in previous literature is surveyed in Section 17.3 . A stylized model that captures the most important aspects of the connection between corporate governance and transparency is presented in Section 17.4 . Section 17.5 concludes the chapter.

17.2 The Key Concepts

The concept corporate governance has a large number of different definitions. Shleifer et al. (2000) , in a frequently cited article, refer to systems by which investors try to ensure that they will get a decent return on the money that they invest in a firm. According to this definition, the main role of the governance system is to reduce moral hazard on behalf of management. Good governance will prevent managers from enriching themselves at the expense of shareholders. This view of corporate governance is frequently called the shareholders’ interest view of corporate governance.

From a broader perspective corporate governance is socially valuable because it will contribute to efficient use of scarce resources in society, that is, achieves a distribution of some scarce resources that is superior to the solution that would arise without properly functioning corporate governance. The scarce resource that corporate governance targets is managerial talent. A good governance system thus makes the best use of available managerial talent.

Making the best use of managerial talent consists of three parts. First, the talent has to be selected from a universe of candidates. Second, the selected talent has to be guided so as to serve the interests of the surrounding society rather than the narrow self-interest of the talented person. Third, if the selected talent, for some reason, ceases to the best choice for the firm, that is, the best fit with other resources at the firm’s disposal, a replacement must be found and properly installed as rapidly as possible.

In any corporate governance system the corporate board holds a key position. Finding the right person for the top management job is the board’s responsibility. 1 The main task of the board, however, is to get the most out of the top management in terms of value creation. This requires proper handling of a difficult balancing act: On one hand the management must be given freedom to pursue value increasing projects, which are seldom obviously so to outsiders, and on the other hand care must be taken so as not to allow management to use its talent to promote projects that are in the management’s own personal interests, at the expense of shareholders. Finally, the board must ensure that a management team with a performance that has deteriorated is being replaced in a timely manner with a better alternative.

In the following it is, for simplicity, assumed that the board is there to promote value creation as the goal for the firm’s activities, that is, to maximize the long-run value of the equity in the firm. As argued by, among others, Michael Jensen (2001) , a firm that operates in the long-run interests of its shareholders will normally also act in a way that is consistent with other stakeholders’ interests. Thus any attempts by a firm operating in competitive markets to exploit customers, employees, or other input providers will make these counterparts shun the firm in the future and will thus result in a loss for the firm and for its shareholders.

The other key concept in this chapter, transparency, is here defined as a state in which there is no information asymmetry; outsiders have a complete understanding of what is going on in the firm. Transparency will thus require full disclosure of all relevant information in a timely manner. The word relevant is crucial here. Just disclosing more information does not necessarily add to transparency 2 . An irrelevant piece of additional information may actually reduce transparency. Improved transparency, by this definition, makes it easier for outsiders to understand developments in the business that the firm is conducting.

The definition of transparency used in this chapter is different from the one that is commonly used in the literature, where transparency is generally taken as a synonym to full disclosure of information. The problem with full disclosure as a definition of transparency is that it doesn’t recognize differences in the usefulness of the information that is being disclosed. By restricting “transparency” in this article to disclosure of “relevant” information this highly important dimension is explicitly taken into account. Considerable measurement issues concerning what information in practice should be classified as more or less relevant naturally remain.

17.3 Related Literature

Earlier literature on the relationship between corporate governance and transparency has in most cases focused on the relationship between corporate governance and information disclosure. A large number of articles especially in accounting journals have been devoted to the relationship between various types information disclosure and different aspects of corporate governance.

In a simple model where information has no production effects, Diamond (1985) shows that information disclosure by the firm will increase the welfare of investors by reducing the total amount of resources that investors have to spend on information acquisition and by improving the risk allocation owing to better estimates of actual values. In the spirit of the main argument in the present chapter Diamond (1985 , p. 1088) notes: “Firms release somewhat less information than the model predicts. In part, this reflects the proprietary nature of some information: releasing certain information may hurt the firm’s competitive position.”

The research on information disclosure can be divided into two groups: research on mandatory disclosure and research on voluntary disclosure. Because the society at large will benefit from more accessible information concerning the financial health of existing firms there is an externality in information disclosure that justifies organized cooperation and government involvement in standard setting and enforcement of existing disclosure standards. 3

Because a commitment to voluntary disclosure, over and above what is mandated in the law, and by regulation, has the potential to further reduce information asymmetry between insiders and outside investors, commitment to additional voluntary disclosure is likely to benefit the firm in the form of a lower cost of capital. A number of results in support of that view have been published, for example, by Botosan (1997) , and Dye (1985) . Dye (1985) gives an adverse selection based argument in favor of voluntary release of information, what he calls the “disclosure principle”: if investors believe that a firm is withholding information they will infer that this information is worse than expected, as otherwise it would pay to release it. This inference by investors will drive down the price until it is worthwhile for the firm to release the information. However, as also noted by Dye (1985) , investors may not be aware of the existence of the piece of negative information in the first place, or be unaware of the character of the information, and in those situations it could be worthwhile for the management to keep investors ignorant.

A great deal of research on information disclosure has been conducted assuming that the disclosed piece of information is exogenous ( Verreccia, 2001 ). The value relevance of the specific type of information has then been studied by estimating the stock price response to the surprise component of the disclosed information. A practical challenge in this setup is to find an appropriate measure for investors’ expectations just before the release of the information. In liquid markets with a number of analysts that frequently publish forecasts the consensus forecast is a natural choice, even if the exact timing of the consensus forecast is subject to uncertainty.

Dye (2001) , in a lengthy comment to the survey by Verreccia (2001) , presents an insightful discussion of why information disclosure decisions should be treated as endogenous. In short, value relevant information will impact the firm’s business through different channels, and those who are making the disclosure decision will take this impact into account. This potential impact of the disclosed information will be a crucial part of the stylized model presented later in this chapter.

There are a number of relatively recent empirical studies on various data sets that look at the relationship between corporate governance and transparency. A good summary of the issues involved and a survey of interesting research can be found in Brown et al. (2011) . Summarizing the empirical work on corporate governance and disclosure these authors conclude (p.142): “Despite the presumption from regulators that corporate governance leads to better disclosure practices, studies find opposing results, leaving the debate open as to whether corporate governance is a substitute for, or complementary to, a firm’s disclosure”.

The question whether corporate governance and transparency, here measured as frequency of information disclosure, are complements or substitutes can be restated as: does better corporate governance provide for more transparency (complements) or could it instead be that better governance pays off in cases where transparency is more difficult to achieve (substitutes)? If the latter holds true we would expect a negative correlation between transparency and proper governance quality in a cross section of firms, even if improved transparency for an individual firm is likely to go hand in hand with improved governance.

There is an obvious argument in support of the view that corporate governance and transparency are substitutes and that is that under complete transparency no corporate governance mechanisms would be required. Shareholders could, whenever they like, themselves check whether the top management acts or doesn’t act in their best interests. The reason why costly governance systems are maintained is precisely because perfect transparency is not achievable. Lack of transparency is what creates scope for moral hazard. Obviously, investment in better corporate governance is justified, by its potential to reduce the incidence of this moral hazard, only in cases where transparency is not perfect. Looking at a cross section of different firms we would thus expect more transparent firms to invest less in corporate governance, which should show up as a negative correlation between investment in corporate governance and the prevailing level of transparency for that firm.

In a recent paper Hermalin and Weisbach (2012) set up a model for the bargaining process between the top management and the firm’s owners where more disclosure is not necessarily in the best interests of the parties involved. The paper argues that if more disclosure is seen as costly by the top management, the top management will require a compensation for applying stricter disclosure rules. This compensation requirement can be higher than the benefits of the additional disclosure to shareholders. Hermalin and Weisbach (2012) conclude that regulation that requires more disclosure than owners find optimal will lead to value destruction since the cost of compensating for the disutility perceived by the top management will exceed the gain from reduced moral hazard. 4

The approach in this chapter differs from the one in Hermalin and Weisbach (2012) in that this chapter strictly focuses on transparency and not on disclosure. There is an important difference between these concepts. Disclosure is a simpler concept that relates to specific pieces of information. Disclosure stands for the act of making such a piece of information available to the public. Transparency, on the other hand, is a concept that requires that we know who the user of the information is. At disclosure a specific piece of information may improve transparency of the firm for a sophisticated analyst while it, at same time, may reduce transparency for an amateur investor for whom the piece of new information may merely be confusing noise.

A distinction between what is properly regarded as transparency as what is merely information disclosure is made in a number of papers, for example, in the one by Bushman et al. (2004b) , who write: “We conceptualize corporate transparency within a country as the joint output of a multifaceted system whose components collectively produce, gather, validate, and disseminate information to market participants outside the firm.” Note that “market participants outside the firm” as recipients of the information are essential for this definition, which in other respects mainly describes the mechanisms by which transparency can be achieved in practice.

In the following we focus on transparency from an investor’s, that is, a shareholder’s, point of view and disregard existing differences in shareholders’ ability to process various types of information. For any given level of shareholder effort to understand the firm improved transparency will provide a deeper understanding of the firm’s business to that shareholder.

Given the preceding definition of transparency, the main reason why members of the top management personally might dislike more transparency would be reduced opportunities to cover up their moral hazard behavior at the expense of shareholders. It is not clear that paying a higher compensation to the management in exchange for improved transparency in this sense would be bad for shareholders. In optimum the marginal benefit to shareholders related to a reduction of moral hazard by management should equal the marginal increase in required compensation that shareholders have to pay.

The approach in this chapter builds on the conjecture that the negative impact on firm value from increased transparency comes from sources other than a potential increase in the CEO’s required compensation, which in the Hermalin and Weisbach (2012) model is the main reason why more disclosure may destroy value.

For a specific firm, subject to incomplete transparency, more transparency should imply better governance. More transparency will make the board less inclined to behave in a way that would be inconsistent with shareholders’ interests. The likelihood that the board will allow the management to sacrifice shareholder value in promoting personal interests will be reduced, other things equal, if transparency improves. In a time series for an individual firm we would thus expect a positive correlation between corporate governance quality and transparency.

The seeming contradiction between a negative cross-sectional correlation and a positive firm specific correlation between corporate governance quality and transparency is easily resolved when we take into account that the optimal level of transparency is related to the firm’s business. Disclosing information of the firm’s business is more costly for some firms than for other firms. Firms where disclosing information is more costly will be more opaque and in those firms the marginal return to investing in proper corporate governance will be higher. In opaque firms better governance is needed to discourage management from exploiting the prevailing relative opaqueness. In contrast, in firms where the business is intrinsically more transparent the marginal return to investing in corporate governance will be much lower and thus the cutoff point for additional profitable investments in corporate governance quality will be lower from the shareholders’ point of view.

In line with the above argument Yu (2011) , in a study based on data for 22 developed countries, observes that even if the stock price becomes more informative with most measures of corporate governance quality it doesn’t hold for board-related governance. The board, of course, is the main instrument for non-transparency related corporate governance.

Beekes et al. (2012) on a data set covering 19 developed countries find that on an individual firm level corporate governance positively influences the level of firm disclosure but that firms with better corporate governance substitute governance for greater transparency. In a reverse causality setting this finding is easier to understand: Where greater transparency is more costly investment in better governance is worthwhile. Beekes et al. (2012) also find that firms with a greater proportion of closely held shares tend to have fewer disclosures and less timely price discovery, which is consistent with the present chapter because block holders with a strong incentive to monitor management are more useful in a situation where more transparency could be harmful for the firm for reasons related to the firm’s business.

Gaio and Raposo (2013) in a study covering 537 non-financial firms in 35 countries “find a negative and statistically significant relation between corporate governance ratings and earnings quality rankings, suggesting that corporate governance and earnings quality are substitute mechanisms.” They state that “the justification for this result would be the lesser need to invest in costly governance mechanisms for those firms that already offer high levels of earnings quality.” This justification fits precisely into the formalized model presented in Section 17.4 .

The main reason why more transparency may hurt a firm and its shareholders, once a certain level has been reached, is that firms almost universally operate in competitive environments. In such environments the firm’s competitors will have a substantial interest for what is going on in the firm. More transparency, in particular concerning the firm’s strategy, will most likely benefit these competitors and thus harm the firm’s business. 5 For evidence in support of the view that this is an important consideration see, for example, Harris (1998) , who in a study on data from the United States in 1987–1991 concludes: “This suggests that the competitive harm cited as a disincentive to detailed segment reporting arises from a desire to protect abnormal profits and market share in less competitive industries” (p. 112). “Less competitive” in this sentence implies stronger threat from potential competitors.

More transparency may also reduce firm value because potential business partners improve their bargaining position when they have more precise knowledge regarding the management’s likely reservation price in negotiating a deal with this firm. The reason for the potential negative impact of transparency on firm value is nicely summed up in Admati and Pfleiderer (2000 , p. 480): “Since disclosure reveals information to competitors or others who interact strategically with the firm, it may cause the firm to lose competitive advantage or bargaining power in various contexts.” 6

If the marginal cost of more transparency—in the form of reduced market value from lower margins due to stiffer competition—will increase with the level of transparency, while benefits will shrink—for example, because of lower impact on the likelihood of discovering attempts by the management to improve their own position at the owners’ expense—there will be an optimal level of transparency. Below that level more transparency will add value for shareholders because expected costs of future moral hazard will go down, and funding costs may fall also because outside investors are able to assess the riskiness of the firm more accurately. Above that level dissemination of information that will benefit competitors and subcontractors dominate, and the market value will fall in response to additional transparency. In the next section this argument will be formalized.

17.4 The Model

For simplicity we assume that corporate governance can add value to the firm in two different ways: either through measures that reduce monitoring costs via improved transparency or through other measures that are not linked to transparency. As an example of these other types of governance improvements we can take replacing a board that is too tolerant of management mistakes with one which is more willing to take radical decisions in response to bad performance.

Based on the logic in the Shapiro and Stiglitz (1984) efficiency wage model one can also claim that simply paying more in compensation to directors in firms with high marginal cost of increased transparency may make sense. The liberal compensation should motivate the director to put down more effort in his job as director so as not to give a reason for shareholders not to re elect him. 7

To formalize the preceding arguments, the value of the firm can be written as an increasing function of the quality of its corporate governance but at the same time as a decreasing function of the level of transparency because more transparency will help competitors and hurt the firm’s bargaining position. 8 Thus the net value of the firm (NV), taking the expenditure on increased transparency ( t ) and the expenditure on other corporate governance enhancing measures ( z ) into account, is:

We know that V (1,0) > 0, and V (0,1) <0, while g (1,0) > 0, and g (0,1) >0, where the superscript (1, 0) in the parentheses denotes the partial derivative with respect to the first argument, and (0, 1) with respect to the second argument. We also assume that the marginal impact of investment into the two components of corporate governance will decrease, that is, g ( i, j ) < 0 for i, j = 2, 0 and 0, 2. The marginal impact of transparency on V will at least not diminish in strength as transparency improves, that is, V (0,2) ≤ 0, which means that the negative value impact will become more significant on the margin as more and more sensitive information must be released.

At the optimal combination of transparency, on one hand, and the governance that is not related to transparency on the other, the partial derivatives of the firm value in (17.1) with respect to t and z must be equal to zero:

From (17.3),

Substituting into (17.2):

Because the partial derivative of firm value with respect to increased transparency on the right-hand side of equation (17.4) is negative it has to be the case that

in optimum. To make the marginal impact on the right hand side lower more should be invested into corporate governance that is not related to transparency than into corporate governance that improves transparency.

A closer look at (17.4) also indicates that if the negative value impact of more transparency—coming from its potential usefulness to competitors and subcontractors—is higher, the firm will invest more into non-transparency–related governance. The reason is that the marginal benefit from those investments in the numerator on the left-hand side is lower, requiring a higher level of expenditure on governance that is not related to transparency. Or as expressed by Bushman et al. (2004a , 2004 p. 167): “. . . limited transparency of firms’ operations to outside investors increases demands on governance systems to alleviate moral hazard problems.”

17.5 Conclusion on Optimal Transparency and Corporate Governance

To understand the relationship between corporate governance and transparency it is crucial to have a clear view of what these concepts stand for. The analysis in this chapter is based on the fairly standard view of corporate governance as mechanisms by which shareholders try to ensure that the firm’s management acts in the owners’ interests. As for transparency in this chapter, complete transparency is taken to be the state that continues to exist if there always is timely disclosure of all relevant information about the firm. Obviously permanent transparency will never be achieved in practice. For any given firm improved transparency could thus make the firm’s business easier to understand for shareholders.

When trying to understand how corporate governance and corporate transparency, as defined previously, are related it is important to understand that corporate transparency is something that will impact not only investors and other stakeholders who do have a positive interest in the well-being of the firm. Improved transparency will also make it easier for competitors to forecast, and thus counteract, the firm’s future strategic moves. More transparency could also make it easier for subcontractors to extract a better deal from the firm. For these reasons more transparency above a certain critical level will not be in shareholders’ best interests.

Because firms differ with respect to how exposed their business is to competition, and also in their use of subcontractors, they will differ too with respect to their optimal combination of transparency and the use of governance mechanisms that are not related to transparency. Using a simple formalized framework, this chapter shows that an unusually high level of spending on non-transparency–related corporate governance is justified in firms where increased transparency would have a strong negative impact on firm value. For firms that happen to operate in an environment where the threat from competitors is smaller, more emphasis should be put on improving transparency, and fewer resources on corporate governance, than for firms that operate in an industry subject to more aggressive competition.

For panel data studies of the relationship between quality of corporate governance mechanisms on one hand, and transparency on the other, the implications are clear. When differences in the environment in which firms operate are properly taken into account a positive relationship should result. This is likely to show up in fixed firm effect regressions because differences in the competitive environment of firms tend to be quite stable over time.

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A relatively tight control from the board is required in finding and selecting a new CEO, even if professional consultants usually are engaged in the process. The reason why the board remains important is to avoid moral hazard on behalf of the experts employed in the recruitment process. A close ally as CEO would most likely be good for the experts’ own future business.

A similar distinction is made in Braendle and Noll (2005) .

For a discussion of the need for regulation of financial disclosure see Admati and Pfleiderer (2000) . An overview of research on regulation of corporate information disclosure is included in Healy and Palepu (2001) .

The need for requiring disclosure to be stricter than shareholders would prefer must come from externalities. However, such externalities are not discussed in the Hermalin and Weisbach (2012) paper.

From society’s point of view the results are less clear-cut. More competition will reduce prices for the firm’s customers in the short run and thus increase welfare. However, stiffer expected competition will reduce firms’ incentives to invest in risky innovations and that may harm society in the long run by reducing beneficial economic growth.

An additional reason why more transparency may hurt firms in some countries is political risk. Governments with a populist agenda may find it tempting to try to expropriate some of the wealth of firms that are highly profitable. Bushman et al. (2004) , in a study covering 46 countries, find that the role of the state in the economy has an important impact on firms’ disclosure behavior. They conclude: “Financial transparency is higher in countries with low state ownership of enterprises, low state ownership of banks, and low risk of state expropriation of firms’ wealth” (p. 244).

It is not clear whether the liberal compensation should be offered the chairperson exclusively or be extended to the whole board. One may argue that because the chairperson is in charge of the board’s work it is most essential that he gets rewarded liberally enough to make it worthwhile for him to draw on the whole board’s expertise.

Berger and Hann (2007 , p. 869) make a closely related distinction from a manager’s perspective. The topic of their paper is sector disclosure by firms. They write: “Managers face proprietary costs of segment disclosure if the revelation of a segment that earns high abnormal profits attract more competition and, hence, reduces the abnormal profits. Managers face agency costs of segment disclosure if the revelation of a segment that earns low abnormal profits reveals unresolved agency problems and, hence, leads to heightened external monitoring.” The empirical results in Berger and Hann (2007) are consistent with the agency cost hypothesis, while the evidence for the proprietary cost motive hypothesis is mixed. These results can partly be explained by the fact that they cover a change in the US reporting requirements in 1997, before the highly visible corporate governance scandals of Enron, WorldCom, Tyco, and so on.

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Transparency in Corporate Governance

Introduction.

Corporate governance is the process of directing and controlling the corporation activities with an aim of ensuring efficient growth and development. The governance process, therefore, integrates the organizational processes, customs and policies and ensures proper coordination within them. Transparency on the other hand is a process of bringing openness and accountability in the organizational operations.

It, therefore, assists the organization to secure the interests of the stakeholders and creditors. Moreover, transparency in the corporate governance has recently been emphasized in all corporations since it assists the organization to grow and also to relate well with the general public. This paper seeks to analyze the key benefits that the McBride organization achieves for ensuring transparency in its corporate governance.

The key parties to corporate government

Both the internal and external stakeholders are greatly involved in corporate governance. The internal stakeholders are also known as the regulatory body and comprise the CEO, board of directors, auditors, management, and the shareholders. The external stakeholders on the other hand comprises of the suppliers, creditors, employees, customers and the general public. Although the shareholders are the core owners of the business, they usually delegate the management and supervisory roles to the board of directors. There is therefore a creation of a principal-agency relationship in the McBride organizational management.

Transparency benefits

Many firms have recently proposed to move towards improving the transparency levels in their firms. McBride organization also seeks to increase transparency in its corporate governance to ensure efficiency in its operations. It is believed that transparency not only improves the profitability level of a firm but also eases conflicts within the management team. The senior management body of the McBride organization should therefore prefer to incur costs to realize the overall transparency benefits which tend to exceed the costs. Some of the costs incurred to ensure transparency includes incentives provisions.

The complete disclosure provides empirical evidence to the shareholders on how their capital is being utilized. Transparency also enhances timely and responsive mechanisms within a firm (Solomon, 2007, p.143). The efficiency of the board is mostly determined by the level of transparency in the McBride organization. It should also be noted that the firm’s directors are the ones who usually set the level of transparency in a firm. More power should be encompassed by the directors since they should dictate the actions of the chief executive officer and also determine the amount and quality of disclosure within the firm.

It is inevitable that for a firm to attain a high transparency level, some managerial costs will have to be incurred. The McBride organization will have to increase the managerial incentives such as salaries which will harm the firm’s profitability level. These incentives are mainly aimed at enhancing improved and quality performances among the management teams. Although the firm’s profitability goes down due to salary and incentives increase, the overall firm value increases.

Market risk

Firms should clearly define their internal controls together with the risks that might affect their smooth operations. This move will enable the management to effectively undertake their roles in the firms. As McCarthy (2004) argues the conflict arises due to the rising suspicions between the professional managers and the business owners. To clear these suspicions, transparency in corporate governance is very critical. Since professional managers tend to pursue their interests, conflict mostly arises where there is a cooperative engagement of interests in the firm. But it should be clear that conflicts are inevitable as long as the shareholders delegate the management roles to the professional managers. Among the major cause of internal conflicts arise from the increased investment risks.

The McBride management should therefore ensure that it excellently handles the market risks since they may lead to value reduction. Among the major market risk that the firm should consider protecting includes the equity and interest rate risks. Firms should try to hedge their risks by ensuring that they are currently updated with the market rates at all times. For instance, the management team will always ensure that the current stock value does not decline. The management should therefore safeguard the shareholders’ interests by ensuring that the value of the stocks appreciates with time.

Although the move will help the firm maintain its reputation to the general public, such trends will always attract external investors who wish to invest in the firm. The management may also opt to diversify their capital portfolio to lower their equity risks. This move aims at expanding and increasing the revenue channels of a firm. The firm may therefore invest some of its capital in real estate or any other profitable ventures.

To regulate the interest rate risk, McBride management should utilize the swap advantage. This will not only enable them to enjoy the floating rate but will also seek to maximize the LIBOR (London InterBank Offered Rate) which shields the firm. Interest rate increases the cost of productions within a firm thus lowering the profitability level. For instance, if a firm undertakes a long-term contract, a rise in interest rate will eventually lower the price of the contract as the firm will be required to incur more than the budgeted costs.

To ensure proper management of interest rate risk, the firm should ensure that it maintains a constant watch on the leading interest rate indicators. They should also effectively adjust the debt-to-equity ratios to ensure that the ratios reflect the market conditions. Firm should also be cautious of the market volatility as they can translate to huge loss if not taken care of.

Credit risk

As it is well known that most of the firm operates not only with their internally generated capital, but they also use some externally sourced capital. Firms should therefore have well-established credit policies which will ensure efficient utilization of the resources. Among the ways that McBride firm can utilize to ensure credit policies viability includes the use of credit bureaus to analyze the firm’s financial history.

The bureaus will enable the firms to be up dated with the current financial news including the security exchange currency fillings. In order to ensure that the firm has a positive progress, McBride should seek to regularly examine its current credit policies. This will not only ensure that the timely measures are undertaken, but it will also ensure that the firm consistently follows the proper guidelines (Chew, 2005).

To reduce the firm’s cost the top management should discourage quarterly incentives review. This is because such reviews will only add more costs to the organization which consequently lowers the profitability level. Regular checks on the account receivables should be encouraged to ensure that the firm’s consumers pay their dues on time. The McBride marketing team should therefore plan to meet their customers regularly and enquire on how they intend to pay their arrears.

The team should seek to adjust the existing payment programs if they sense that difficulties may be realized in future. Measures such as extending the payment period may be used to ease the customer’s debt burdens. The McBride credit financial officers should also ensure that all the credit guidelines are followed to the later in order to reduce chances of problems development within the firm.

The financial statement and reporting risk

The McBride organization should ensure that it uses proper accounting techniques. This will not only improve the reliability of the statements, but will also enable the firm to compare itself with other forms within the same industry. The firm should therefore ensure that its financial statements are transparent. That is they reflect the true and fair value of the firm. It is only under such scenario that the internal and external users can be able to use the statements in analyzing their performances. In this case the disclosure should describe the true, quantifiable, and describable risks (Chew, 2005). This is because the users may not have the knowledge and skills to understand the complexity involved in the financial statements preparations.

For instance the shareholders can only be able to check the firm’s performances by comparing the current profit with the previous one. McBride should ensure that it effectively submit its tax liability on time. The compliance will prevent the firm from paying penalties and fines associated with tax avoidance. To improve the reliability of their statements, McBride should purposely invite an external auditor who should file up the final report to be presented to the board. The use of an external auditor will enhance transparency in the firm’s accounting department. The external auditor helps in revealing fraudulent misrepresentation by the internal auditor and the accountants.

McBride organization should consider replacing the current board of directors with more competent and experienced personnel. This move will not only help in the improvement of the managerial status but will also add creativity and fresh ideas to the firm. In order to improve the transparency, the power and authority of the senior officials should be checked by the board. The subordinate staff should also be empowered to maximize their creativity and innovativeness.

Their ideas should be incorporated in the firm’s decisions since by so doing they will be motivated to work more. Incorporating the employee’s ideas will also make them accountable to the firm’s decisions which improves transparency. The firm’s recruiting body should also exercise transparency when employing new employees. This is because any attempt to violate transparency later builds up a negative culture which might immensely harm the overall operations of the firm. Recruitment of competent personnel will also increase confidence levels among the McBride workforce. Strong and effective ethical guidelines should be enforced to adherence to the staff. In case of violation, strict measures should be taken to discourage such actions in the future.

Transparency in corporate governance should be encouraged within a firm as it improves the image and reputation of the firm to the general public. Both the internal and external stakeholders are greatly involved in corporate governance. Many firms have recently proposed to move towards improving the transparency levels in their firms. McBride organization also seeks to increase transparency in its corporate governance to ensure efficiency in its operations. It is believed that transparency not only improves the profitability level of a firm but also eases conflicts within the management team.

The senior management body of the McBride organization should therefore prefers to incur costs in order to realize the overall transparency benefits which tend to exceed the costs. The firms should aim at reducing their market risks as the move will better the agency relationship that exists between the board and the shareholders. Among the major market risk that the firm should consider protecting includes the equity and interest rate risks.

Firms should try to hedge their risks by ensuring that they are currently updated with the market rates at all times. Firms should therefore have well-established credit policies that will ensure efficient utilization of the resources. To reduce the firm’s cost, the top management should discourage quarterly incentives review. This is because such reviews will only add more costs to the organization which consequently lowers the profitability level. Regular checks on the account receivables should be encouraged to ensure that the firm’s consumers pay their dues on time. The firm should therefore ensure that its financial statements are transparent. That is they reflect the true and fair value of the firm. It is only under such scenarios that the internal and external users can be able to use the statements in analyzing their performances.

Chew, D.H. (2005). Corporate Governance at the Crossroads . New York, McGraw-Hill. Web.

McCarthy, M. (2004). Risk from the CEO and Board perspective . New York, McGraw-Hill. Web.

Solomon, J. (2007). Corporate governance and accountability . New Jersey, John Wiley and Sons. Web.

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The value of Transparency in Corporate Governance

Law is ever-evolving, and new challenges and regulations are constantly arising. This article dives into the unifying value of transparency in corporate governance and how this can be compared across three key jurisdictions: the UK, Europe, and Luxembourg.

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The huge advances in technology made over the course of the last decade mean that the requirement for transparency in corporate governance is more important than ever. As online platforms and social media have become integral to doing business, especially globally, companies must quickly adapt to ensure their efficiency in this new digital age. This is why corporate governance policies must fit the new requirements imposed on companies, especially in relation to corporate transparency. Who can forget the Enron Scandal , and the tale of a successful company that reached illustrious heights only to experience such a bewildering descent?

Corporate governance is vital to any business, and transparency and accountability are crucial components of good governance. This article discusses how each country has implemented corporate governance policies and practices to encourage transparency and accountability.

In this article, we will cover the following:

Enron’s Devastating Collapse: What Can We Learn from It?

Enhancing corporate governance with accountability and transparency, the importance of disclosure, the key to eliminating market abuse, defining and establishing best practices, analysis of corporate governance best practices, the crucial role of disclosure, transparency and accountability.

The abrupt collapse of this powerful corporation Enron, once one of the largest in the world, remains astonishing even today. It’s especially difficult to comprehend how its management succeeded in deceiving regulators for years by placing bogus assets and deceitful accountancy practices. Yet the scandal inadvertently highlighted the crucial importance of transparency in corporate governance. It revealed how the unethical behaviour of specific figures within the company – illustrated through the extensive insider trading and absence of visibility into corporate and government entities – contributed to the collapse of the global financial markets.

The shocking revelations sparked the implementation of a worldwide program of proactive and vigorous reforms, as business leaders and governments understood all too well how if left ignored, such an inherent lack of transparency might one day result not only in the collapse of the markets but in worldwide economic disaster. Indeed, just last year, in an investigation into auditing problems at companies, journalists at Bloomberg News pointed out that:

It’s not clear that investors are any safer today than they were before Enron Corp. failed.

Corporate governance is a wide term. Ultimately, however, it refers to the effective system of governance that companies should have in place to ensure the existence of confidence between all the different parties involved in various markets, notably the capital market, the labour force, as well as customers and suppliers. Understanding how entities react to the need for a solid legitimate, regulatory, and institutional framework in which market participants can place their faith is critical from both a local perspective as well as a global standpoint – as the devastating effects of Enron demonstrated. Various European nations’ corporate governance codes and acts showcase a wide range of progressive developments, from fresh boardroom practices to new statutory regulations. Indeed, Europe is among the world’s most rapidly evolving corporate governance climates.

Accountability and transparency are the key principles relevant to the efficacy of corporate governance codes in any company and in any jurisdiction, although there are subtle differences in focus between the legislation in various countries.

In the United Kingdom (UK), for example, the principles inherent to the Corporate Governance Code focus primarily on the rights and responsibilities of the company board, the shareholders and other relevant stakeholders, whilst in Germany, the Deutscher Corporate Governance Kodex establishes the key standards expected from company behaviour and outlines a company’s expected responsibilities of its board of directors, management, and shareholders.

It is critical to be aware of the rights of shareholders to safeguard them from the misapplication of corporate assets by management, as well as the power of auditing and accounting standards in assessing the level of information asymmetry, particularly from an international angle. These corporate governance characteristics determine the power balance between shareholders and the management of entities.

Disclosure is highly valued in corporate governance, and it is an obligation for companies in Luxembourg, Germany, and the UK to guarantee their transparency in operations, decision-making processes, and financial reporting to maintain appropriate corporate governance.

This requires that firms are answerable to their stakeholders and furnish periodic reports on their activities and financial performance. Moreover, companies should highlight any risks or doubts that might impact their business and present regular financial statements that are easy to comprehend and available to all stakeholders.

Transparency in corporate governance means that businesses must observe the best practices. This includes the establishment of solid internal controls, the implementation of a clear command hierarchy, and the fostering of open communication and collaboration among all stakeholders. Companies must ensure the diversity of their board of directors and that it represents all their stakeholders, as well as monitor the performance of its duties.

These days, following the implementation of European wide legislation such as the EU Market Abuse Regulation , which was long awaited for its framework for preventing, detecting, investigating and punishing market abuse, the outrageous misuse, manipulation and outright deceitful appropriation of company assets has hopefully been, for the most part, eliminated.

One egregious example of such abuse occurred at the UK car manufacturing company MG Rover Group when it was discovered that four of the company’s directors had paid themselves huge dividends while simultaneously running it into the ground. The directors took large bonuses for five years until MG Rover Group finally went bankrupt in 2005.

When their greed and dishonesty were finally discovered , it was too late to rectify the £1.3 billion of debt they had left behind, along with the thousands of local people they had caused to lose their jobs, causing hugely negative implications for the local economy. Yet this is just one example.

Another case that comes to mind is the case of the Dutch international retailer Royal Ahold, which in 2003 revealed the numerous accounting irregularities of its various subsidiaries. Its CEO, CFO and, shamefully, the executive responsible for its European operations were all charged with fraud. Then in May 2006, they were judged guilty by a Dutch federal court of the falsification of paperwork and handed suspended prison sentences and substantial fines. The proliferation of fraud and the abuse of company assets at the director level across Europe was a key contributor to the development of European Union (EU) legislation on corporate governance.

The European Commission (EC) “Corporate Governance” Directive 2006/46/EC mandated that all publicly listed companies are required to include a corporate governance statement in their annual accounts for shareholders for the first time.

Various long-term strategies followed, such as the EC’s Europe 2020 and EU Action Plan , as the EU attempted to bolster corporate governance, enhance competitiveness, and foster sustainability among firms across the EU. To a great extent, these projects have been highly successful, with a range of EU corporate governance changes achieving substantial changes.

However, across the EU, and specifically in the UK, LUX and Germany, significant challenges continue in relation to ensuring the success and complete acceptance of corporate governance initiatives. A complicating issue with regard to the unification and harmonization of corporate governance concerns the variation in the legal forms of businesses across jurisdictions. This includes the public, private as well as in the not-for-profit sectors.

Each sector has its own particular governance issues, which must be met through the application of the best practice principles developed for their application from the German Corporate Governance Code ( Deutscher Corporate Governance Kodex ) that lays out the necessary rules for the oversight and administration of publicly traded German businesses, and comprises internationally and domestically accepted guidelines and suggestions to promote responsible and conscientious corporate governance to the overarching corporate legislation of the Companies Act 2006 in the UK, and then to the lattice of various statutory regulations in Luxembourg, which has not yet established any official code of best practice for the benefit of shareholders.

In the past two decades, multiple transformations have taken place with regard to corporate governance conventions among EU member states. Nowadays, numerous European businesses comply with the principles of excellent corporate governance. These practices come with certain advantages, such as improved disclosure and transparency in respect of: accurate financial statements, minority shareholder rights, connected dealings, remuneration, and acquisitions. Owing to the European Union corporate governance initiatives, a substantial amount of convergence has been accomplished regarding corporate governance practices, though conflicts continue.

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The Need for Harmonization

Yet the divergence of corporate governance best practices across the European Union (EU) still remains. In Luxembourg, the United Kingdom (UK), and Germany, the corporate governance law, statutory regulations, and models for governance in public and private business remain very different. This means that there is substantial room for improvement in terms of harmonizing corporate governance practices across the EU.

In the following articles, we will explore how the corporate governance law, regulations, and models of governance in public and private business in Luxembourg, the UK, and Germany, in particular, are developing. We will examine each region’s current regulations and models and how each nation’s corporate governance laws and regulations evolve. We will also analyze the approaches to corporate governance adopted in each region and evaluate their effectiveness. Finally, we will consider the potential for harmonising corporate governance best practices across the EU and discuss how it could occur. Through our analysis of corporate governance best practices in Luxembourg, the UK, and Germany, we hope to provide readers with a comprehensive overview of the current state of corporate governance in the EU and highlight the potential benefits that harmonization could bring.

About this article

Regulation (EU) No. 596/2014 of the European Parliament and of the Council on market abuse as complemented by the Act of 23 December 2016 on Market Abuse as last amended by the Act of 27 February 2018, implementing Regulation (EU) No. 596/2014, Directive 2014/57/EU and Directive 2015/2392/EU. Directive (EU) The European Commission (EC) Directive 2006/46/EC amending Council Directives 78/660/EEC on the annual accounts of certain types of companies, 83/349/EEC on consolidated accounts, 86/635/EEC on the annual accounts and consolidated accounts of banks and other financial institutions and 91/674/EEC on the annual accounts and consolidated accounts of insurance undertakings. Deutscher Corporate Governance Kodex (German Corporate Governance Code) UK Companies Act 2006 Boitan, A. and Maruszewska, E. W. (2021) “Corporate Governance Features among European Union Countries – An Exploratory Analysis ” The Review of Finance and Banking 79-91 Constable, S. (2021). How the Enron Scandal Changed American Business Forever European Commission (2010). European Top 20. A strategy for smart, sustainable and inclusive growth. Farrell, G. (2021). Twenty Years After Enron, Investors Still Vulnerable to Fraud Financial Times (2009). Fraud agency to investigate MG Rover case Goodley, S. (2011). MG Rover directors banned from running companies after collapse Milkiewicz, H. and Wei S. (2003). A Case of ‘Enronitis’? Opaque Self-Dealing and the Global Financial Effect Principles for Responsible Investment. (2018). Action 10: Fostering sustainable corporate governance and attenuating short-termism in capital markets Szalay, G. (2019). “The Impact of the Lack of Transparency on Corporate Governance: A Practical Example” Corporate Law & Governance Review Volume 1, Issue 2. The New York Times (2006). Ex-Ahold Executives Fined in Netherlands Fraud Case Walker, R. (2002). Enron’s Transparent Problems

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Free Corporate Governance Essay Examples & Topics

Corporate governance is a set of policies and rules used to direct and control a company’s operations. It is essential for managing a firm and balancing the interests of the stakeholders, shareholders, executive directors, suppliers, and customers. Accountability, transparency, fairness, and responsibility form the corporate governance framework.

Assigned a corporate governance essay? Our IvyPanda team is ready to help you with this task. But before all else, let’s learn its essential aspects.

There are a few key principles of corporate governance. Firstly , shareholders have control over the boards. Their voting rights directly depend on their economic interests.

Secondly , boards should keep in touch with the shareholders and meet their expectations. Thus, they should have strong leadership skills. In essence, they are responsible for enhancing the effectiveness and adopting new practices.

Finally , boards should develop a working management system. Its goal is to positively affect a company’s performance in the long run.

In this article, we have collected corporate governance essay questions and examples. They will assist you in preparing and writing your paper. Additionally, you will find free samples written by fellow students.

Great Corporate Governance Essay Questions

Checking corporate governance assignment topics can be useful for many reasons:

You can look through multiple ideas at the same time. Thus, you may understand what it would be interesting to write about.
Different ideas can show you how to formulate your own topic.
Lastly, you can find an idea for your work.

We have put together a small list for you to check. Find more ideas by trying our title generator . It will create new topics for your paper automatically.

Here are some corporate governance topics:

What is corporate governance? How do you implement it correctly?
The role of the audit committee in developing an effective financial management strategy.
What are some examples of corporate governance approaches in American firms?
Should employees who have children with disabilities have extra social care benefits?
Accounting fraud and possible ways to deter it.
The role of business ethics in striving for equality and eliminating discrimination at the workplace.
Top 5 the most effective governance models.
Governance research in developing an efficient long-term managing strategy.
What are the similarities and differences in corporate governance principles in public and private firms?
Advantages and disadvantages of cultural diversity at the workplace.
How can corporate governance help prevent the firm’s economic crisis?
Structure hierarchy vs. flat management model. What is more appropriate for governing large corporations?
Agency relationship between two parties. Possible problems that may occur in this kind of cooperation.
The effect of corporate social responsibility on a firm’s image and reputation.
How to recover from failures in project management and take the maximum benefit from them.
The importance of having a clear mission statement for the company’s reputation in the market.
How can a company reach sustainability in terms of production and distribution of the products?

5 Corporate Governance Examples

In your essay, you can consider examples of corporate governance for different reasons. They can be used as a subject of discussion, evaluation, or as supporting evidence. That’s why we have provided some good examples in this section:

Integrated business management system (IBMS)

In most organizations, each department has its own key performance indicators. Yet, it is essential to see a holistic picture of the company’s performance. One of the solutions is to imply IBMS and combine all management systems. IMBS ensures transparency, cross-departmental collaboration, traceability, and visibility.

Regular internal audits

The role of routine internal audits cannot be underestimated. They allow identifying current problems and vulnerabilities in the company. Moreover, audits help evaluate the corporate environment and make some adjustments if needed.

Training management system

Investments in employees’ training are always a great idea! The knowledge and skills that the workers acquire during the courses will bring valuable input to a company. Thus, simple training can boost the company’s performance to a great extent.

Risk management

Identifying, accessing, and managing the risk are the key elements of successful corporate governance. It is essential for the company’s managers to acknowledge the possible threats. Plus, they should have a clear plan of how to overcome these obstacles.

Successful management relies on valid data. Therefore, it is essential to report true key performance indicators. It will help evaluate the firm’s achievements and adjust the strategy if needed.

Thank you for reading! Below, see corporate governance, diversity, and inclusion essay examples. They will help you better understand the subject and how to write about it. You can shorten each paper with our summarizer to read them faster.

201 Best Essay Examples on Corporate Governance

Environmental, social and corporate governance.

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What is corporate governance?

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Corporate Governance and Corporate Social Responsibility

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British Petroleum Company’s Corporate Governance Failure

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Inclusion and Diversity

Bureaucracy in an organization, corporate governance at singpost.

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Organizational Structure at Starbucks

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US Companies’ CEOs: Severance Packages, Failures and Results

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Corporate Governance and Risk Management

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HP Acquisition of Autonomy in 2011

The arguments for and against mandatory system of corporate governance.

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Delta Airlines: Corporate Governance and Leadership Issues

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Corporate Governance in the Documentary “Inside Job”

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Matrix Organizational Structure

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Starbucks: Corporate Finance Analysis

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Cross-Cultural Management and HRM in Walmart

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Effective Project Governance in Organizations

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Importance of Agency Relationships

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Stakeholder and Shareholder Capitalism Models

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Expatriate and Executive Compensation Comparison

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Tanzanian Banking Sector: Corporate Governance

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Corporate Governance and Dispute Settlement

Et-moone and business-to-business relationships, corporate governance and voluntary risk disclosure, corporate governance failures discussion, corporate governance and its role in business, acwa power governance changes, corporate internal governance structure & innovation behavior.

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Corporate Governance at Wirecard

Companies’ primary responsibilities and strategies, board of directors importance for company, diversicare healthcare services inc.’s obstacles, ukraine’s code of corporate governance, corporate governance in emerging economies, deloitte touche tohmatsu limited firm’s governance model.

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Executive Compensation and Board of Directors’ Decisions

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Agency Theory: The “Combined Code” and the SOX

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Singapore Post Limited’s Corporate Governance

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HRM Role and Fixing Corporate Governance Failures

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IT Governance at Richter Company

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Institutional Governance Mechanisms and Expectation Gap

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Business Performance and CSR of FAI

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Governance Failures in Australian Banking Sector

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Activism in Visual and Media Culture: Characteristics of Corporations

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The Impact of Corporate Governance and Ownership Structure

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Evaluation of Corporate Performance

Words: 2211

CQUniversity: Corporate Governance and Ethics

Words: 1984

CFO Report: Chesapeake Energy Corporation

Words: 4434

Directors of The Procter & Gamble Company

Cases of successful and of failing corporate governance, cross-sectional differences in corporate capital structures.

Words: 2291

Ways of Improving Corporate Governance in the Post-Enron Era

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The Kraft – Cadbury Takeover and the Glencore-Xstrata Merger

Words: 1999

Recommendations for the Corporate Governance Best Practice

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Regulations in Corporate Governance

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Insurance Companies’ Profitability in Saudi Arabia

Words: 1919

Corporate Governance: Problems of the Hewlett Packard

Deming: 14 points of transformation.

Words: 1928

Chapters 1-2 of Corporate Governance by Kenneth

Proxy fight: genzyme, companies and corporation liquidation and bankruptcies: with a focus on saudi arabia.

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Accountability and Performance Measurement of Corporate Governance in the Public Sector of Saudi Arabia

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Internal Audit in Saudi Companies

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Sarbanes-Oxley Act and Nonprofit Organizations

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Corporate Governance and Disclosures on the Transition to International Financial Reporting Standards

Riordian manufacturing co.: corporate compliance plan.

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Reputation of National Social Security Authority

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Corporate Social Responsibility Activity

Corporate health policy overview, agency theory in corporate governance: criticism and real application.

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On the Relevance of Bureaucracy

Director’s behaviour and company ceos trustworthiness perception, corporate governance in germany.

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Corporate Governance and Its Reform in Hong Kong

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How Corporate Leadership Controls Hotel Franchise

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The Phenomena of Open Innovation

Changes in the company due to external and internal factors, ibm: issues in democratic principles & diversity in the workplace, merger and acquistion: terms definition, abu dhabi commercial bank: corporate governance principles.

Words: 1255

Ganong Bros Critical Financial Time Analysis

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Group Motivation Inventory

Stakeholder relationships, social responsibility, and corporate governance, corporate performance, governance, and business ethics, on the need to save general motors from bankruptcy, corporate governance: term definition, environmental, social, and governance metrics in business.

Words: 1460

COSO and COBIT Committees in a Field for Corporate Auditions

Governance, ethics and law.

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The Concept of Corporate Governance

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Business Roundtable on Corporate Governance in 1997 and 2019

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Corporate Governance Issues in the Company

Corporate governance framework and financial performance, sarbanes-oxley evaluation and its implications, sarbanes-oxley act and us corporate governance, sarbanes-oxley act and corporate governance, etisalat: change as an innovation, corporate governance practice: nike in vietnam.

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Corporate and Information Security Governance

Corporate governance concepts.

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Corporate Governance Understanding

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Assessing and Managing Sustainability

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Corporate Government During the World Financial Crisis

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Corporate Governance During the Global Financial Crisis

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Corporate Governance: Enron and Parmalat Case

Corporation directors’ and shareholders’ duties, overcoming the five dysfunctions of a team.

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Corporate Governance Impact on Firm Performance

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Effects of Corporate Governance on Firm Performance

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Corporate Governance Practices in Saudi Arabia

Corporate governance and risk management theories.

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Sample details

Corporation

Corporate Governance

Words: 1372

Transparency in Corporate Governance

Transparency in Corporate Governance The concept of transparency to corporate complianceThe degree of compliance with standards and law is ultimately an impressionistic judgment.

For example, an international NGO annually releases a Corruption Perception Index based on surveys that document the perceptions of analysts, academics, and business people. The 2001 profile of ninety one countries ranks Finland first (9.9) 10 is a perfect clean score and Bangladesh last (0.4).

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There are many ways to circumvent the disclosure of information. In spite of legal obligations, compliance is essentially measure of good faith. Compliance does not ensure that proffered information is useful. In instances of closed-door policy deliberations for example, “transparency” simply means that meeting minutes, however vague or incomplete are posted.

Essentially toothless, disclosure policies are no guarantee that information will reach the public. Both the IMF and the World Bank releases certain information only to their member governments, never directly to citizens. An agency may choose to disclose pedestrian data or to obfuscate information in lengthy documents couched in tortured language. And there are always exemptions.

Both the US Freedom of Information Act (1966) and the NAFTA transparency decision against Canada permit governments to withhold information those governments deem vital to national security (McBride, 2003).An idea spawned from a rich philosophical lineage, transparency states a goal, the freedom actualized by self-governance and the means for achieving it (McBride, 1997), open communication in the public sphere. Utopian transparency, which is impossible to fully measure and achieve, is the pithiest expression of the quest for self-determination and self-legislation. Ultimately, the dissemination of useful information will depend more on providing motives and incentives than the threat of sanctions and uncertain enforcement.

The Concept of Transparency to Corporate GovernanceProblems of transparency are linked to problems of accountability. Russian company officials who seek to avoid accountability will take all necessary steps to limit transparency. An offer, who wishes to take advantage of a corporate opportunity, or to arrange favorable terms for a supply contact with his own company, has no desire to expose his deeds to the scrutiny that accompanies transparency. Another problem for transparency is historical.

Russian company officials have emerged from a culture in which information was hidden and secrecy abounded. No matter what his background- red director, black marketer, or government bureaucrat-that company official learned the value and reality of secrecy, opacity, and obfuscation very early in his career.Transparency suffers when insiders rely on techniques other than good leadership and management skills to operate business successfully.Finally, transparency in corporate governance falls prey to a somewhat unexpected problem.

To many Russian company officials, transparency causes more problems than it solves. In today’s Russian, corporate predators abound. Illegal takeover attempts occur more frequently than legal attempts. Manipulation of the courts system, illegal attacks by minority shareholders, and sham transactions followed by equally sham bankruptcies are all threats that Russian companies face.

Also, their competitions, particularly those with great resources and influence with the authorities, are often prepared to flout the law to achieve their takeover objectives. They ignore or bypass laws that call for an independent share registry, that require announcements of large dividends, and that mandate the publishing of detailed financial statements, all of which are seemingly routine corporate acts that are consistent with transparency. For a company that is a takeover target, complying with these practices can be fraught with peril in the minds of company officials.Evaluation of Relationship: Self-interests of Management and effective corporate governanceAgency theory is concerned with the agency problem exists when there is an agency relationship.

In an agency relationship, one party (the principal) delegates decisions and/or work to another (agent). The agency problem occurs when the principal and the agent have different goals. The underlying assumption of the agency theory is that agents are self-interested, risk-adverse, and rational actors. In the agency relationship, two typical problems could arise.

The first is the monitoring problem that arises when the principal cannot verify if the agent behaved appropriately. The second is the problem of risk-sharing that arises when the principal and the agent have different attitudes toward risks (Eisenhardt, 1989).The relationship between firm owners or shareholders (the principal) and the top management (the agent) is a typical principal-agent relationship. Agency theory sheds important light on how to design effective management control of such a relationship.

First, agency theory implies that agent’s self-interests can be monitored by information system. Thus, formal information systems, such as budgeting and management reporting, and informal information sources, such as managerial observation and surveillance are important aspects of control. Second, agency theory views control system aspects of compensation and incentive schemes tools for better aligning an agent’s motives with organizational goals. This explains the importance of share options or management ownership in the management control system of a company (McBride, 1994).

Stewardship theory is proposed as an alternative perspective to agency theory. The underlying assumption of the stewardship theory is that managers are good stewards of firms. They are trustworthy and work diligently to train high corporate profits and shareholder’s returns (Donaldson & Davis, 1994). Instead of focusing on goal conflict, stewardship theory proposes that the principal and the steward can cooperate with each other and achieve a goal alignment.

Thus, stewardship theory focuses on developing mutual trust and cooperation between principals and stewards. Indeed, the steward theory proposes that trustworthy and cooperative relationship between principals and stewards are positively correlated with firm performance. This has several important implications for management control systems. First, trust and cooperation can be enhanced by having effective information sharing mechanisms.

Under the stewardship theory, information systems are primarily for the principal to share information with and not necessarily to monitor the stewards. Second, arrangements that foster understanding and identification between principals and stewards will increase the degree of trust between them, thereby leading to better film performance.Stewardship theory differs from agency theory in several key aspects. Instead of relying on the premise that managers (agents) are opportunistic and self-serving, stewardship theory assumes that these managers are trustworthy and cooperative.

Instead of emphasizing the need for monitoring and control, stewardship theory directs our attention to trust and relationship-building between principal and stewards. Thus, while agency theory focuses on the independence of different groups (for example, board members, monitoring committee, and management), stewardship theory underlines understanding and identification between them.The relationship between the agent and the principal is formalized in agency theory, which describes the relation between the company’s decision makes the officers, directors, and management and its owners, and the issues related to potential conflicts of interest between agents and principals. In a small business, the owners and managers are often the same, so there is no potential conflict of interest between the owners and the decision makers.

However, in larger business, there is separation of ownership and decision making, and therefore the owners must entrust directors, officers, and managers with the responsibility to make decisions on behalf.In conclusion, the aim of this paper was to link transparency to economic growth. A growing level of awareness in both the public and the private sector about the necessity of implementing best practices of transparency and corporate governance. Is it encouraging? Yes, it is.

Is it adequate? No. A lot more needs to be done in order to lay down the solid foundation for the development of the democratic society, economic prosperity and social wealth. By coordinating efforts of all parties involved, by building a multilateral multinational anti-corruption network, and by setting up clearly defined corporate governance and anti-corruption agenda for each of the nations and companies involved, we will be able to drastically reduce the strain of corruption and make one more step towards a better world. References Davis, P.

& Donaldson, J. (1994). Seven Principles for Cooperative Management. Cooperative Management.

A philosophy for business. Chelterham: New Harmony Press. Eisenhardt, K. M.

(1989). Agency theory: an assessment and review. Academy of Management Review, (Vol. 14, pp.

57-74) McBride, W. L. (1997). Existentialist Politics and Political Theory.

Taylor & Francis. McBride, S. & Griffin, M. (2003).

Global Turbulence: Social Activist’s and Response to Globalization. Ashgate Publishing, Ltd. McBride, P. (1994).

Managing Quality. Boston: Butterworth Heinemann.

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Why Corporate Governance Matters

International Corporate Governance Network (ICGN) Washington, D.C. Conference, hosted by the IFC March 7 – 8, 2024 Keynote Speech Emmanuel Nyirinkindi Vice President, Cross-Cutting Solutions, IFC

As prepared, for delivery

Good afternoon, everyone! It’s great to see the ICGN here at IFC!
Indeed, all of us at IFC are pleased to be able to host your conference here at our headquarters and to welcome you!
People who believe in the benefits of good governance;
And people who make good governance part and parcel of what you do each and every day.
Now, early in my career, before IFC, I worked for the Government of Uganda. There, I helped set up Uganda’s Institute of Corporate Governance. It was a project dear and near to my heart … and it remains so.
Fast forward to today and you can imagine how privileged I feel to be here with you.
Let me thank you, Kerrie, for introducing me, and for inviting me to join you.
I’d like to also salute Kerrie.
She has had quite a successful tenure.
For example, when we updated our Corporate Governance Methodology in 2018 at IFC, we turned to ICGN for guidance … and you helped us get to a product that is in-line with international best practice.
Since we focus on clients in emerging markets around the world, we are also happy to see that ICGN is following our interest and taking a deeper look at corporate governance in those markets too.
It’s clear: we have learned — and are learning — a great deal from one another.
And we have much in common.
When I look at ICGN, I see you advancing the highest standards of corporate governance and investor stewardship worldwide. You do this in pursuit of long-term value creation. You do this to contribute to sustainable economies, societies, and the environment.
Your influence is quite significant — as you bring together investors with assets under management of around 77 trillion dollars .
When you look at IFC, I hope you see the largest global development finance institution focused exclusively on the private sector. For over 25 years now, we have played a leadership role in the evolving ESG landscape — from pioneering early ESG concepts around safeguards to developing our corporate governance methodology.
I am proud to say that IFC has facilitated 11 billion dollars in financing due to improved corporate governance practices, of which 1.9 billion was directly from our own resources.
This is a way to create long-term value.
This is how we drive sustainable and inclusive private sector-led development.
And this is what I want to highlight today.
As the world faces considerable environmental, economic, and social challenges, I see four ways corporate governance is moving the needle on sustainable and inclusive private sector-led development.
Let me say a few words on each of these ways.
First, better governance is essential to robust E&S risk management.
The research is clear. ESG risk awareness and management can contribute to improved long-term financial performance.
In other words, environmental, social, and governance considerations are inextricably linked with business and economic success. You can’t have one without the other.
With this context in mind, we updated our Corporate Governance Methodology in 2018 to incorporate the governance of environmental 5 and social risks . A well-functioning corporate governance framework is essential for this.
We outlined the board’s role in risk management, including E&S risk management, and who reports on sustainability.
In addition, we expanded our methodology to include the governance of stakeholder engagement .
ICGN, too, recognizes the value of integrating E&S risks management into corporate governance approaches.
And I am sure many of you can point to examples in your own organizations.
Collectively, we have all come a long way, particularly in the past decade, on designing and implementing integrated ESG risk management and investment stewardship approaches . These are driving long-term value creation not only for shareholders, but also for all stakeholders.
A second way corporate governance is moving the needle toward sustainable and inclusive development is on how it equips boards to address both the risks and opportunities of climate change.
Boards are uniquely positioned to drive climate action.
I think the World Economic Forum captured it best when they said that, “Climate change is simply another issue that drives financial risk and opportunity, which boards inherently have to address with the same rigor as any other board topic.”
No company can afford to dismiss the effects of climate on its financial performance — and board members have a fiduciary duty to act.
We see the network lay out why accounting for climate change matters to investors.
You suggest ways for constructive dialogue between investors and companies on this matter.
Now, this dovetails well with how we approach climate governance at IFC. We support boards in incorporating climate into their strategies and into how they identify, they monitor, and they respond to climaterelated issues.
This is particularly relevant as large institutional investors, many of you present here today, continue to press companies to eliminate greenhouse gas emissions by 2050.
This reality leads us to one conclusion: It’s impossible for boards to ignore climate change.
Third, corporate governance supports more inclusive and genderdiverse business leadership.
We gather here today, on the eve of International Women’s Day tomorrow — a day which focuses us all on the urgency of investing in women to accelerate greater gender equality. Corporate governance can drive us forward on this.
After all, gender diversity — and, I would add diversity in all its forms — are hallmarks of a highly functioning board.
For one thing, more women on boards has a positive effect on climate change mitigation and adaptation. A recent IFC survey showed that companies in emerging markets with between 20 and 60 percent women on their boards were more likely to have formal climate change-related commitments and net-zero goals …compared to boards with less than 20 percent in female representation. Think about that for a moment!
Other studies found that firms with at least 30 percent women board members outperformed their peers when it comes to climate policy and transparency.
When we zoom out and look at overall ESG performance , we see that 30 percent female representation comes with higher ESG standards. This includes stronger internal controls, reduced risk of fraud or ethical violations, positive workplace environments, increased stakeholder engagement, and enhanced brands.
These are very important for all of us.
One way we are doing this at IFC is by nominating directors in our equity investments. Now, back in 2010, roughly 80 percent of our board nominees were men. But to achieve gender balance, we pursued more thorough talent searches and supported more women in becoming ready to serve on boards. As a result, I can say we are exceeding our ambitions, as 62 percent of our board nominees are now women .
And it’s certainly not just IFC. Many of you have been at the forefront of pushing for more gender-diverse corporate leadership.
And this work is paying off I’m happy to say.
The latest UN Sustainable Stock Exchanges Initiative Market Monitor for Gender Equality shows us that a significant number of stock markets in Europe and in North America have achieved a critical percentage of women — reaching 30% on their boards.
Fourth and finally, corporate governance drives greater disclosure and transparency that can shift capital flows to sustainable investment opportunities.
Let me give you a tangible example: Investors and regulators increasingly require disclosure of climate-related risks and opportunities to help direct capital toward companies and activities aimed at climate mitigation and adaptation.
In other words, when companies increase their climate reporting, investors can better understand — and I would say, ultimately, manage, their ESG risks … and seize the opportunities to invest in sustainable businesses.
This has become particularly important as we look to meet the ambitions of the 2030 Sustainable Development Agenda and of the Paris Agreement. Investors and stakeholders want to understand the narrative behind how a company is creating long-term value and sustainability.
This is especially important as we look at emerging markets … where the development challenges are greatest.
But, in those markets, investors often face ESG data shortages because of limited disclosure regulations. Sometimes, data is missing altogether.
I am very excited about one way IFC is addressing this gap.
It’s quite exciting to see this tool in action.
Our ESG experts developed it.
It uses over 15 years of emerging markets data, AI, and natural language processing to simplify the extraction of meaningful ESG 11 insights from dense reports and news to enable transparent and speedy decision-making to support sustainable investments.
For the first time now, MALENA is available as a public good. You can log onto malena dot ifc dot org — that’s, malena dot ifc dot org — to access it and see for yourself.
I assure you, you’ll be super-pleased that you did.
Corporate governance matters.
It matters to minimize risks and to optimize ESG principles.
It matters for the climate. o It matters for women and for greater inclusion.
It matters for sustainable investments — and for shifting to the use of latest technology to fill data gaps and to make informed decisions in the markets that need development impact the most.
Let us learn from one another.
Let us debate and discuss.
And let us reaffirm what we know best: The more inclusive, sustainable, and resilient world that we all seek can — and must — be built with sound, solid and strong corporate governance at its very core.

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Corporate Strategy Overview from Governance Manager
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Accountability, Transparency and Trust in Governance
Are You a Beneficial Owner under the Corporate Transparency Act? From simple to complex examples

COMMENTS

Transparency Is (Full) Disclosure in Corporate Governance
Abstract. Corporate disclosure and reporting of information has become synonymous with transparency which in discourses idealising its value is part of the rhetoric of good governance. This notion is overtly conveyed in principles and codes of corporate governance practice which have proliferated globally over the last three decades.
PDF Transparency and Corporate Governance
Additionally, sox increased the penalties to executives for misreporting. The link between governance and transparency is clear in the public's (and regulators') perceptions; transparency was increased for the purpose of im-proving governance. Yet, most academic discussions about transparency have nothing to do with corporate governance.
The impact of the lack of transparency on corporate governance: A
definition: the adequate governan ce system of. companies, which covers the relations between the. management, the ow ners, the employees and other. persons concerned, and is based on the lawful ...
The Role of Financial Reporting and Transparency in Corporate Governance
In our article, The Role of Financial Reporting and Transparency in Corporate Governance (Economic Policy Review, 2016), we review the recent corporate governance literature that examines the role of financial reporting in resolving agency conflicts among a firm's managers, directors, and capital providers.We view governance as the set of contracts that help align managers' interests with ...
[PDF] Transparency and Corporate Governance
An objective of many proposed corporate governance reforms is increased transparency. This goal has been relatively uncontroversial, as most observers believe increased transparency to be unambiguously good. We argue that, from a corporate governance perspective, there are likely to be both costs and benefits to increased transparency, leading to an optimum level beyond which increasing ...
Transparency and Corporate Governance
Transparency and Corporate Governance. An objective of many proposed corporate governance reforms is increased transparency. This goal has been relatively uncontroversial, as most observers believe increased transparency to be unambiguously good. We argue that, from a corporate governance perspective, there are likely to be both costs and ...
PDF The Impact of the Lack of Transparency on Corporate Governance
Corporate Law & Governance Review/ Volume 1, Issue 2, 2019 23 erupted in the second half of the 1990s and caused robust political, legal and social controversies as the
Corporate Governance and Optimal Transparency
This chapter explores the link between corporate governance and transparency. It begins by discussing definitions of corporate governance and transparency and goes on to review the literature on their relationship, covering also research on information disclosure. It then introduces a stylized model for the interrelationship between corporate ...
Transparency in Corporate Governance Essay Example [Free]
Business essay sample: Corporate governance is the process of directing and controlling the corporation activities with an aim of ensuring efficient growth and development. Call to +1 844 889-9952 ... To clear these suspicions, transparency in corporate governance is very critical. Since professional managers tend to pursue their interests ...
Corporate governance in today's world: Looking back and an agenda for
Corporate governance has been defined in various ways from "the system by which companies are directed and controlled" (Cadbury, ... In this essay, we highlight key changes in the corporate governance context over the past two decades and provide scholars a roadmap for future research. The newly transformed shareholder landscape and the ...
Transparency and Corporate Governance
An objective of many proposed corporate governance reforms is increased transparency. This goal has been relatively uncontroversial, as most observers believe increased transparency to be unambiguously good. We argue that, from a corporate governance perspective, there are likely to be both costs and benefits to increased transparency, leading ...
PDF Transparency, Corporate Governance and Capital Markets Ronald J ...
II. Corporate Governance and Transparency At this point, the relationship between good corporate governance and transparency should be apparent. Corporate governance at its core involves the monitoring of the corporation's performance and the monitor's capacity to respond to poor performance - the ability to observe and the ability to act.
Essays on corporate transparency and governance practices.
This dissertation studies corporate governance issues at a micro-level using U.S. and international industry and firm data. On the domestic front, it proposes a new measure of transparency, based ...
Essays on corporate transparency and governance practices
It also investigates how the choice of corporate governance is determined by firm-specific attributes and legal environment, and how governance is related to firm performance. This dissertation consists of four essays. The first essay adopts a new measure of transparency based on the amount of firm-specific variation in stock prices.
The Relationships among Corporate Governance Principles and Firm ...
The principles of corporate governance which are fairness, transparency, responsibility and accountability have been studied. The data were collected randomly from 116 companies in Istanbul in 2019 based on field study including five-point Likert scales questionnaire.
PDF Three Essays on Environmental, Social, and Governance Transparency
Entitled: Three Essays on Environmental, Social, and Governance Transparency and submitted in partial fulfillment of the requirements for the degree of Doctor Of Philosophy (Accountancy) complies with the regulations of the University and meets the accepted standards with respect to originality and quality.
Transparency in Corporate Governance Free Essay Example
Download. Essay, Pages 7 (1520 words) Views. 442. Many recent corporate governance scandals have caused government to implement a number or regulatory modifications. One factor in relation to these changes is improved disclosure requirements. An example, Sarbanes-Oxley (SOX), created because of Enron, WorldCom, and additional public governance ...
(PDF) Effects of Corporate Transparency: Literature ...
good corporate governance system, as stated by Fung (2014). Hence the key words - Transparency, Disclosure and Corporate Governance are likely to be most frequently used
The value of Transparency in Corporate Governance
Action 10: Fostering sustainable corporate governance and attenuating short-termism in capital markets Szalay, G. (2019). "The Impact of the Lack of Transparency on Corporate Governance: A Practical Example" Corporate Law & Governance Review Volume 1, Issue 2. The New York Times (2006). Ex-Ahold Executives Fined in Netherlands Fraud Case
Free Corporate Governance Essay Examples & Topics
Corporate governance is a set of policies and rules used to direct and control a company's operations. It is essential for managing a firm and balancing the interests of the stakeholders, shareholders, executive directors, suppliers, and customers. Accountability, transparency, fairness, and responsibility form the corporate governance framework.
⇉Transparency in Corporate Governance Essay Example
Transparency in Corporate Governance The concept of transparency to corporate complianceThe degree of compliance with standards and law is ultimately an impressionistic judgment. ... This essay could be plagiarized. Get your custom essay "Dirty Pretty Things" Acts of Desperation: The State of Being Desperate. 128 writers
Why Corporate Governance Matters
Fourth and finally, corporate governance drives greater disclosure and transparency that can shift capital flows to sustainable investment opportunities. Let me give you a tangible example: Investors and regulators increasingly require disclosure of climate-related risks and opportunities to help direct capital toward companies and activities ...
Northern Alabama Court Rules Corporate Transparency Act
The Corporate Transparency Act obligates certain businesses to disclose ownership details to the Financial Crimes Enforcement Network of the U.S. Department of the Treasury, aiming to combat tax evasion and money laundering. However, this ruling solely impacts the parties involved in the lawsuit, leaving the legislation intact for other businesses.