The Sarbanes–Oxley Act and non-US issuers: Considerations for international companies

10.5912/jcb54 ◽  
1969 ◽  
Vol 10 (1) ◽  
Author(s):  
Megan N Gates
Keyword(s):  
Corporate Governance ◽  
Public Confidence ◽  
Securities Markets ◽  
Accounting Scandals ◽  
The Us ◽  
Governance Practices ◽  
The Usa ◽  
International Companies

The Sarbanes–Oxley Act of 2002 was signed into law by President George W. Bush on 30th July, 2002, in the wake of an unprecedented wave of corporate governance and accounting scandals that fundamentally shook public confidence in the integrity of the US securities markets. The Act's widespread effects continue to be analysed and dissected by companies and their advisors both in the USA and abroad. One of the most controversial elements of this legislation is its impact outside the borders of the USA, which is beginning to affect some of the most basic corporate governance and disclosure practices of companies worldwide. Foreign issuers subject to the Act must now begin to review their corporate governance practices carefully in order to ensure compliance with the new rules.

scholarly journals A critical review of corporate governance reforms in Malaysia

2017 ◽  
Vol 6 (1) ◽  
pp. 38-44 ◽  
Author(s):  
Ahmad Al-Hiyari
Keyword(s):  
Corporate Governance ◽  
Financial Statements ◽  
Business Environment ◽  
Market Regulation ◽  
Policy Makers ◽  
Corporate Managers ◽  
Accounting Scandals ◽  
Governance Practices ◽  
Capital Market Regulation ◽  
Local Business Environment

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.

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

2017 ◽  
Vol 17 (1) ◽  
pp. 77-88 ◽  
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.

scholarly journals The relationship between corporate governance and firm performance revisited: where do we stand?

2010 ◽  
Vol 7 (3) ◽  
pp. 124-137 ◽  
Author(s):  
Stefan Hilger
Keyword(s):  
Corporate Governance ◽  
Business Models ◽  
Corporate Performance ◽  
Holistic Approach ◽  
Governance Mechanisms ◽  
Governance Practices ◽  
The Usa ◽  
The Impact ◽  
The Relationship

How is corporate governance measured, and what is the relationship between corporate governance mechanisms and corporate performance? This paper aims to shed light on these questions by providing an overview of the most important research findings in this area with a focus on the USA and Germany. My analysis gives rise to the following remarks. First, studies examining the impact of singles governance mechanisms are inconclusive and mixed in their findings, and especially the question of causality is still unanswered. Second, when a holistic approach is used, the proposition that good corporate governance enhances long-term performance is supported. However, corporate governance practices alone cannot assure long-term corporate performance and good standards of corporate governance are no substitute for the solidity of business models.

Corporate governance failures and the road to crime

2015 ◽  
Vol 23 (1) ◽  
pp. 216-230 ◽  
Author(s):  
Peter Yeoh
Keyword(s):  
Corporate Governance ◽  
Financial Reporting ◽  
Secondary Data ◽  
Savings And Loans ◽  
Content Type ◽  
Study Approach ◽  
Financial Crimes ◽  
Governance Practices ◽  
The Usa ◽  
The Uk

Purpose – The purpose of this paper is to provide enhanced insights on corporate governance failures which contributed to various financial crimes in major banking institutions and whether those involved have been held sufficiently accountable in the USA and the UK. Design/methodology/approach – This interdisciplinary doctrinal research relies on primary and secondary data and is complemented by the case study approach. Findings – Case insights demonstrate that a few major banks and isolated numbers of bankers at the lower echelons were held accountable in the USA but to a lesser degree in the UK. This contrasts sharply with the earlier Enron-type corporate financial reporting scandals or the much earlier Savings and Loans Crisis; but recent criminal charge practices against mega banks suggest a policy shift. Research limitations/implications – The paper findings suggest the need for further research in this under-researched area, while the banking communities in the USA and the UK may be prompted to review their corporate governance practices. Originality/value – This interdisciplinary research uses corporate law and criminological research to provide enhanced insights on financial crimes perpetuated in major banks in the USA and the UK.

Civilization and madness: the great BSE scare of 1996

1997 ◽  
Vol 6 (3) ◽  
pp. 221-232 ◽  
Author(s):  
Sheila Jasanoff
Keyword(s):  
Expert Knowledge ◽  
Formal Analysis ◽  
Public Institutions ◽  
Problem Definition ◽  
Public Confidence ◽  
The Public ◽  
The Us ◽  
The Usa ◽  
Governmental Institutions ◽  
The Uk

During the UK's BSE crisis of 1996, citizens and their public institutions experienced an unprecedented breakdown of communication that I call `civic dislocation'—a mismatch between what governmental institutions were supposed to do for the public, and what they actually did. Trust in government vanished, and people looked elsewhere for information and advice. In the UK, public confidence in governmental advisers rests on the reliability of persons rather than (primarily) the rationality of their views; in the USA, on the other hand, trust rests in formal processes and styles of reasoning that ensure the transparency and objectivity of governmental decisions. UK policy institutions require a set of conditions—among them a shared, unambiguous problem definition, relative certainty about `objective facts' and identifiable expert knowledge—which in the BSE case simply did not exist. Given the pervasive uncertainties, the distance between citizens and experts was greatly reduced, and the lay public was almost as well positioned as the experts to make sensible decisions about how to avoid the risk of BSE. This reading of civic dislocation in the UK should make us wary of recent proposals to create pockets of insulated expertise within the US risk management system to neutralize unfounded public fears through rationality, expertise, insulation and authority. A programme that values rationality and efficiency most highly leaves little room or reason for lay inputs; and, by putting too little faith in people and too much in the objectivity of formal analysis, may also carry the seeds of civic dislocation.

Fair value accounting practices in the banking industry: a possible opportunity to launder money through manipulated performance

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
K.L. Wasantha Perera ◽  
Roshan Ajward ◽  
Sisira Dharmasri Jayasekara
Keyword(s):  
Corporate Governance ◽  
Money Laundering ◽  
Management Practices ◽  
Banking Industry ◽  
Fair Value ◽  
Fair Value Accounting ◽  
Content Type ◽  
Legal Proceedings ◽  
Accounting Scandals ◽  
Governance Practices

Purpose The purpose of this paper is to discuss the possible money laundering threats in fair value accounting practices giving particular attention to the list of predicate offences under recommendations of Financial Action Task Force (FATF). Design/methodology/approach This paper discusses case studies related to global accounting scandals and link outcomes of those scandals with the list of predicate offences given in FATF recommendations to build propositions. Findings The analysis reveals that legal proceedings on major accounting scandals show that legal proceedings have been restricted owing to a lack of evidence because of the technicality of frauds. Often the authorities have failed to prove cases under the list of current predicate offences which can be linked to accounting malpractices, i.e. fraud. Therefore, policymakers are required to revisit the list of predicate offences and the feasibility of considering accounting malpractices as a predicate offence to strengthen the corporate governance practices in regulated institutions. The adoption of fair value accounting practices provides opportunities to managers to adopt earnings management practices under a fair value accounting regime to maintain stable performance. The fair value practice recognizes unrealized gains which are not based on transactions giving bank managers an opportunity to repeat the outcomes of the discussed accounting scandals. Therefore, it is essential to criminalize accounting malpractices to strengthen the corporate governance practices in the banking industry and prevent possible accounting scandals. Research limitations/implications This study was designed to discuss the implications of fair value accounting practices on possible opportunities of money laundering. This paper provides only a viewpoint based on the analysis. Therefore, an empirical analysis is required to establish the authors’ views in a fair value accounting regime. Originality/value This paper is an original work done by the authors which discuss the implications of fair value accounting practices on possible money laundering. The views are original ideas of the authors in this context.

scholarly journals India Stepping for IFRS: A Critical Review

2016 ◽  
Vol 4 (2) ◽  
pp. 423
Author(s):  
Nilmani Tripathi
Keyword(s):  
Corporate Governance ◽  
Critical Review ◽  
Reporting Standards ◽  
Governance Mechanism ◽  
Macroeconomic Factors ◽  
Ifrs Adoption ◽  
Accounting Scandals ◽  
The Us ◽  
Corporate Governance Mechanism ◽  
Reported Earnings

<div><p><em>The Asian crisis of 1990, the US accounting scandals like that of Enron, World com, Adelphia, European scandals of Ahold  and the present economic crunch all have enforced the importance of effective corporate governance mechanism and global GAAP.  All these activities have forced the development of some universal reporting standards i.e. IFRS.  The benefits which Indian companies hope to reap after IFRS adoption are numerous.  But no benefits can be drawn without facing some crucial challenges.  The current shaken market confidence globally may present significant challenges to organizations.  Adoption of IFRS could result in an added considerable volatility in reported earnings and some performance specific measures like EPS and P/E Ratio.  Entities will have to clarify reasons for this IFRS related volatility apart from other macroeconomic factors.  This paper talks about some such challenges and impact of IFRS implementation in some sectors of the Indian economy.  The sectors mainly touched upon are that of retail, technology, telecom and power.  The paper closes with two small cases of JK Paper and Wipro who have gone for the adoption of IFRS.   The cases will aid in understanding the implementation issues of IFRS.</em></p></div>

A consideration of the impact of the Companies and Allied Matters Act (1990) and the Insurance Act (2003) on the board of insurance companies in Nigeria. Part 1

2009 ◽  
Vol 51 (5) ◽  
pp. 336-358 ◽  
Author(s):  
Fidelis Ogbuozobe
Keyword(s):  
Corporate Governance ◽  
Financial Services ◽  
Insurance Companies ◽  
Financial Services Industry ◽  
Content Type ◽  
Governance Practices ◽  
Effective Performance ◽  
The Usa ◽  
Services Industry ◽  
The Impact

PurposeThis paper (which is Part 1 of 2) seeks to explore the development and implementation of good corporate governance in the financial services industry in Nigeria.Design/methodology/approachThe paper reflects upon the identification of current problems and official legislative responses in Nigeria and tests the policy and theory against actual responses and practices.FindingsWith the collapse of such mega companies as Enron in the USA and the near‐collapse symptoms observed in such a relatively big company as Cadbury Nigeria, such research as this, on the issue of compliance or otherwise with corporate governance practices by organizations, could not have been undertaken at a more appropriate time than now. Considering the ever‐increasing scope and complexity of the subject, which cannot be covered by a single project, the particular focus here is on the impact of the Companies and Allied Matters Act (1990) and the Insurance Act (2003) on the Boards of insurance companies in Nigeria. In other words, do the said statutes contain sufficient provisions and sanctions to ensure effective performance by Boards of insurance companies in Nigeria?Originality/valueWhile this research paper may not claim to fill this gap completely, it is hoped that it will create sufficient awareness to serve as a springboard for effective entrenchment and enforcement of corporate governance practices in the Nigerian financial services industry (including insurance) in particular and the economy in general.

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