Corporate Governance Exam Paper
Games Directors play
While analysing the Reality of Boardroom we say many games and tactics often employed by directors so that they don’t lose power. Some such games were alliance, coalition, lobbying, scaremongering, log rolling etc. Here also majority of BOD were near and dear ones of Bright so everybody chose to stay quiet about what is going on.
Under-reserving
Like we say in the HLL case under-reserving is a tactic used by firms but in the long run it cant stop companies from collapsing.
Role of independent directors
The question Are independent directors really independent has been topic of debate for ages. In the case the role played by independent directors is insignificant. Also it is questionable whether independent directors were present and in the number advised by law or not.
Audit Committee
The case talks about KPMG and the arguable role it played but what about the audit committee, was it existent, if so how was it functioning. Its composition and leadership needs attention.
Manipulation
Most of the cases of accounting frauds, falsifying records, deceiving shareholders and bankruptcy rest upon the manipulation of the balance sheet and the tactics used to fudge the data. Ex: Enron
The company needs to take inspiration from firms like GSK, Infy, and tata which serve as examples of good CG.
GSK
* Chairman of board is independent director along with 5 others in in board. Transparency is valued
Infosys
* Creating wealth legally and ethically
Tata
* One of the giants and still fascinating governance * In sync with the values * Very elaborate code of conduct
Board composition and structure
One of the major flaw ways in the board structure is everyone was quiet about the rising storm dominated by power and status of Bright. There should be some independent directors with ability to question the acts and deeds and the following structures are recommended.
European Two Tier model
Shareholders Supervisory board
While analysing the Reality of Boardroom we say many games and tactics often employed by directors so that they don’t lose power. Some such games were alliance, coalition, lobbying, scaremongering, log rolling etc. Here also majority of BOD were near and dear ones of Bright so everybody chose to stay quiet about what is going on.
Under-reserving
Like we say in the HLL case under-reserving is a tactic used by firms but in the long run it cant stop companies from collapsing.
Role of independent directors
The question Are independent directors really independent has been topic of debate for ages. In the case the role played by independent directors is insignificant. Also it is questionable whether independent directors were present and in the number advised by law or not.
Audit Committee
The case talks about KPMG and the arguable role it played but what about the audit committee, was it existent, if so how was it functioning. Its composition and leadership needs attention.
Manipulation
Most of the cases of accounting frauds, falsifying records, deceiving shareholders and bankruptcy rest upon the manipulation of the balance sheet and the tactics used to fudge the data. Ex: Enron
The company needs to take inspiration from firms like GSK, Infy, and tata which serve as examples of good CG.
GSK
* Chairman of board is independent director along with 5 others in in board. Transparency is valued
Infosys
* Creating wealth legally and ethically
Tata
* One of the giants and still fascinating governance * In sync with the values * Very elaborate code of conduct
Board composition and structure
One of the major flaw ways in the board structure is everyone was quiet about the rising storm dominated by power and status of Bright. There should be some independent directors with ability to question the acts and deeds and the following structures are recommended.
European Two Tier model
Shareholders Supervisory board