Corporate Governance Consequences of Accounting Scandals: Evidence from Top Management, CFO and Auditor Turnover

Following the East-Asian financial crisis in 1997 and the corporate accounting scandals, the shareholder’s confidence in the audited financial statements was adversely affected and regulators started to think seriously reforming the existing corporate governance practices. As a result, numerous initiatives were implemented to accelerate improvement of corporate governance practices. One of these initiatives was the Malaysian Code on Corporate Governance (MCCG). The code was derived from the approach applied by the British Hampel Committee, which attempt to mitigate the agency problem between corporate managers and outside owners. This study suggests that the British approach is unsuitable to Malaysian business environment. Particularly, the MCCG that had been lunched since 2011 ignore the uniqueness of Malaysia’s capital market, regulation environment and ownership structure. Therefore, the study recommends that policy makers and other regulators should consider the local business environment when establishing future code on corporate governance.

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Synergy Of Top Management Team Characteristics, Corporate Governance And Social Responsibility: How Performance Of Large Manufacturing Firms Changed

Archives of Business Research ◽

10.14738/abr.66.4737 ◽

2018 ◽

Vol 6 (6) ◽

Author(s):

Julius Ogola Mugwang’a ◽

Zachary Bolo Awino ◽

Martin Ogutu ◽

Jackson Maalu

Keyword(s):

Corporate Governance ◽

Social Responsibility ◽

Top Management Team ◽

Manufacturing Firms ◽

Management Team ◽

Top Management ◽

Team Characteristics

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Financial accounting scandals and the reform of corporate governance in the United States and in Italy

Corporate Governance ◽

10.1108/cg-05-2016-0125 ◽

2017 ◽

Vol 17 (1) ◽

pp. 77-88 ◽

Cited By ~ 5

Author(s):

Daniel P. Sorensen ◽

Scott E. Miller

Keyword(s):

United States ◽

Corporate Governance ◽

Financial Reporting ◽

The United States ◽

Class Action ◽

Financial Accounting ◽

Private Enforcement ◽

Content Type ◽

Accounting Scandals ◽

The Usa

Purpose In the 1990s and beginning of the next decade, a series of financial accounting scandals occurred in the United States (USA or US) and in several other countries of the world. The USA and Italy (among others) responded with legislation to reform financial reporting and corporate governance in these jurisdictions. This paper aims to compare the regulatory response of Italy to that of the USA. Design/methodology/approach This paper includes a review of relevant literature and evaluation of the actions of the regulatory authorities. Findings In the case of the financial reporting crises, the rapid response put the USA into the role of the “first mover” with the European Union (EU) reacting to US initiatives and eventually converging to a large degree with the provisions of the US legislation. Italy has adopted many of the same regulatory reforms as the USA and has added some reforms that are directed to the specific needs to Italy. Research limitations/implications In conjunction with legislative initiatives like Sarbanes-Oxley, private enforcement mechanisms, such as shareholder class action suits in the USA, play an important role in discouraging and punishing financial accounting fraud. Practical implications In the absence of significant reforms of the Italian private enforcement system, corporate governance abuses and the potential for accounting scandals may still be persistent. As a whole, cooperative efforts continue between the USA and the EU. Such efforts are needed more and more, as companies become increasingly globalized. Originality/value This paper provides comparison and evaluation of corporate governance reform efforts in the USA and Italy.

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Is top-management remuneration influenced by board characteristics?

International Journal of Accounting and Information Management ◽

10.1108/ijaim-11-2013-0062 ◽

2015 ◽

Vol 23 (1) ◽

pp. 60-79 ◽

Cited By ~ 3

Author(s):

Sebastien Deschenes ◽

Hamadou Boubacar ◽

Miguel Rojas ◽

Tania Morris

Keyword(s):

Corporate Governance ◽

Academic Research ◽

Top Management Teams ◽

Top Management ◽

Management Compensation ◽

Content Type ◽

Board Characteristics ◽

Good Corporate Governance

Purpose – The purpose of this article is to examine if certain board characteristics have an impact on the total remuneration of top management and the ratio of stock-based remuneration to total top-management remuneration. Design/methodology/approach – The study draws on data from the largest public Canadian companies, the constituents of the TSX/60 index. The study controls for firm size and profitability. Findings – The authors concludes that total remuneration of top management is directly linked to board-member total remuneration and the board average number of director-tenure years. The study also shows that the ratio of stock-based to total top-management remuneration is positively affected by the percentage of independent directors, total remuneration of board directors, the ratio of stock-based remuneration of directors to their total remuneration and the average number of tenure years of the board of directors. Practical implications – If regulators are determined to curb the excesses in top-management remuneration by means of promoting boards with certain characteristics, they should implement measures facilitating the control of directors’ remuneration and tenure, to discourage cronyistic behavior. Good corporate governance requires that the board act as a counterbalance to top management, ensuring that a substantial percentage of top-executive total compensation is variable, and not fixed. According to our findings, the boards that are the most likely to hold managerial avoidance of variable pay in check are those favoring director independence, variable director remuneration and longer director tenures. Social implications – The present article examines specifically the latter aspect, namely, the role of board characteristics (independence, size, compensation, board director ownership and tenure, etc.) in the determination of top-management compensation. This relationship is important because it allows us to further the analysis of corporate governance. If the above-mentioned traits of boards have a meaningful relationship with the compensation of the top management, one might conclude that certain practices in the composition of boards could influence good corporate governance practices. This is relevant for regulatory agencies, for investors and for corporations. Originality/value – The article adds to the extant literature in a number of ways. Firstly, it considers the role of the traits of the board in the determination of the compensation of the top-management teams, and not only of the chief executive officer, as is the focus of previous literature. Secondly, the article focuses on the power interplay between boards and managers, and, more particularly, on the ability of boards to be an effective mechanism of corporate governance. Finally, the article examines the potential impact of board traits in the determination of top-management compensation in the context of Canadian firms, a subject that has received less attention from academic research, which has mostly concentrated on analyzing the issue in the US context.

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