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Cooperate Government Issue

Essay by   •  May 18, 2011  •  Research Paper  •  584 Words (3 Pages)  •  1,522 Views

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Corporate Governance is the step that provides an overview of how companies are controlled and the important of company accounting to the exercise of that control. Corporate Governance deals with many definitions that are the ways are managed and governed (Leo 2009,p.573). There are some debate for what is corporate governance defined.

According to Farrar, Corporate governance compacts with "the control of corporation and to system of accountability by those in control" (2005, p.3). In the others words, corporate governance refer to control and accountability more than law .For example, locating the business strategy is important function and having interact between the corporation and stakeholders.

In addition to the appropriate definition is specified in the Corporate governance principles and recommendations (p.3) of the Australian Securities Exchange (ASX): "is the framework of rules, relationships, systems, and process within and by which authority is exercised and controlled in corporations". The corporate governance provides the distribution of legislation and legal responsibilities between different members in the corporation, such as the board, manager, shareholders and stakeholders. By doing this, it also specifies the structure through which the company objectives are set, and the means of attaining those objectives and monitoring performance (http://www.business.uts.edu.au/).

It is easy to see there are multilevel concepts around the Corporate Governance (Leo 2009, p.568). This would be created confusion in the way apply these concept in practical and even more it is involve the corporate collapse.

*Comment on the part that "weak corporate governance" played in a recent corporate collapse in Australia.

The efficient applied of the Corporate Governance affect the confident investor and company's performance (http://www.asx.com.au/governance/corporate-governance.htm). It also involves the duties and responsibilities of a company's management. There are many reasons to create the weak governance such as the board's knowledge, poor information flows, the weak relationship among members, corporate governance system (Leo 2009, p.573).

Take HIH Insurance Ltd as an example, one of Australia's corporate collapses. One of significant reason is that understanding what is concept is and how it use to create a successful business model are extremely important. The board did not understand the strategy of company and confuse what is exactly corporate governance play. The role of the chair was not executed well and they had poor information flow (Leo 2009, p.573). What they got is a little information about the big issues in organization. Moreover, the information they received or supplied that focus on the wrong (Leo 2009, p.573). For example, the financial report did not seem to be reliability of the earning and ratio. Overall,

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