Corporate Governance Benchmarking Project: BDO Governance in Practice
Corporate governance bmg718 | Corporate Governance Benchmarking Project | BDO LLP UK | | Melanie Lloyd, B00532809 | 5/7/2013 |
Table of Contents 1. Introduction 2 2. Theories of Corporate Governance 6 3. BDO Governance in Practice 12 4. Conclusion 15 5. Bibliography 16
1. Introduction
1.1. Evolution of Corporate Governance
There are a number of ways of defining ‘corporate governance’; operationally it is considered to be “the process by which companies are directed and controlled” (Cadbury Report, 1999), it has also been described as the relationship between shareholders, management and the board of directors, which determines the strategy and direction of the company (Monks and Minow, 2001). When considered in general terms Turnbull described it as:
“All influences affecting the institution processes, including those for appointing the controllers and/or regulators involved in organising the production and sale of good and services…..it includes all types of firms whether or not they are incorporated under civil law.” (Turnbull, 2002:181)
Factoring in all other definitions, in its simplest terms it can be defined as the “exercise of power over corporate entities” (Clarke, 2004).
It is not the same as the management and the running of the company, it is concerned with how the Board of Directors, who are the governing body of a company, supervise management, because it is they who are responsible for holding the management of a company accountable and ensuring the company is being ran in a way which is favourable towards the shareholders and other stakeholders. It is the Directors’ responsibility to develop strategy and policies for the company and to determine the direction the management should take the business in and the Directors have overall responsibility for the performance of the company (Tricker, 2012).
While the phrase ‘corporate governance’ wasn’t coined until the 1960’s and not commonly used until the 1980’s, it has
Table of Contents 1. Introduction 2 2. Theories of Corporate Governance 6 3. BDO Governance in Practice 12 4. Conclusion 15 5. Bibliography 16
1. Introduction
1.1. Evolution of Corporate Governance
There are a number of ways of defining ‘corporate governance’; operationally it is considered to be “the process by which companies are directed and controlled” (Cadbury Report, 1999), it has also been described as the relationship between shareholders, management and the board of directors, which determines the strategy and direction of the company (Monks and Minow, 2001). When considered in general terms Turnbull described it as:
“All influences affecting the institution processes, including those for appointing the controllers and/or regulators involved in organising the production and sale of good and services…..it includes all types of firms whether or not they are incorporated under civil law.” (Turnbull, 2002:181)
Factoring in all other definitions, in its simplest terms it can be defined as the “exercise of power over corporate entities” (Clarke, 2004).
It is not the same as the management and the running of the company, it is concerned with how the Board of Directors, who are the governing body of a company, supervise management, because it is they who are responsible for holding the management of a company accountable and ensuring the company is being ran in a way which is favourable towards the shareholders and other stakeholders. It is the Directors’ responsibility to develop strategy and policies for the company and to determine the direction the management should take the business in and the Directors have overall responsibility for the performance of the company (Tricker, 2012).
While the phrase ‘corporate governance’ wasn’t coined until the 1960’s and not commonly used until the 1980’s, it has
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