ACCA SBL - Chapter 03 |
Chapter 03 Corporate Governance
How is corporate governance achieved across the world?
Principles or Rules
Features
特点
P: comply or explain
investor 有权选择
R: Comply with a detailed and rigi code
non-compliance cant be justified
Benefit
P: flexibility, cost saving
applies across different legal jurisdictions
good for multi-national business
R: easier compliance with the rules
easy to find evidence
provide / increase investor's confidence
Disadvange
P: too board 广泛, ittle use as a guide
investor cant be confident
R: allow no leaway or deviation
no special case
difficult cover all explicity in rule
Example
P: UK CORPORATE GOVERNANCE CODE 2016
R: USA Sarbanes-Oxley Act 2002
Different jurisdictions
通常讲UK&USA
CG in UK
8
1. Cadbury Report 1992
• Voluntary code of best practice
• Defined roles for all involved with financial statements
• Clear division of responsibilities
• Non-executive directors
• Audit committee
2. Greenbury Report 1995 (dont let them be fat cat)
• Determination of directors' pay
• Disclosure of directors' pay
• Remuneration committee
3. Hampel Report 1998
• Reduce regulatory burden
• Principles-based approach
4. Combined Code 1998
合上3为一
5. Turnbull Report 1998
• Risk management
• Internal control
6. Smith Report 2003
• Role of audit committees
7. Higgs Report 2003
• Role of non-executive directors
8. Combined Code 2006 and 2008
• 2006 updated for Turnbull, Smith & Higgs
•'2008 revision 2 minor restrictions removed
• 2010 onwards saw the introduction of the UK Corporate Governance Code
CG in USA
The Sarbanes-Oxley Act 2002 (USA)
SOX
∵Enron Scandal 而出
用act来约束
1. The establishment of the Public Company Accounting Oversight
Board (PCAOB)
What is corporate governance? (fundamental internal control system)
Definition:
relationships between a company's directors, its shareholders and other stakeholders
11 CORE pricipal
Reputation
Qualities that ensure the best decisions are made
Integrity 正直 有良心
honesty/straightforward
Fairness (balance)
Judgement
Independence ( free from bias)
Scepticism 职业怀疑
considering all parts of a business with an open mind
Qualities that ensure honest and transparent disclosures
Transparency
open and clear disclosure
Probity
truthful and not misleading
Responsibility
Accountability
Innovation 创新
Regulatory guidance
organisation for econimic co-operation and development (OECD) 经济合作与开发组织
[five broad areas]
The rights of shareholders 尊重股东权利
The equitable treatment of shareholder 公平/平等对待每一位股东
The role of stakeholders 考虑每一个stakeholder
Disclosure and transparency
The responsibilities of the board 董事会的权力
International Corporate Governance Network (ICGN) 国际公司治理网络
9 points
Sustainable value - long term success is a prerequisite of good governance
Boards should be effective, diverse, experienced and accountable for their actions
Corporate culture should support ethical behavior, supporting whistleblowers if necessary 鼓励告密者
Risk management should be formally undertaken in line with shareholders' expectations
Remuneration should be transparent and aligned appropriately with risk and other objectives
Audit should be robust, effective and independent (both internal and external)
Disclosure and transparency should be at the heart of all relations with stakeholders
Shareholders' rights should be protected and respected by directors
Shareholder responsibilities should also be respected by shareholders (ie not ignored)
What impact does ownership have on corporate governance?