Corporate governance involves the rules, practices and processes that a company uses for direction and control. It includes ensuring that the management, government, financiers, shareholders and the whole community has balanced interests in the company. The corporate governance also provides a framework for attaining the objectives of the company. Every aspect of the management is covered in corporate governance including the performance of the company, the plans and objectives and the corporate disclosure. They are also be said to be the rules and practices which a board of directors ensures that there is fairness and transparency with everyone involved in the company including the stakeholders, management, government, employees and its customers. The framework of corporate governance includes implicit and explicit contracts drawn by the stakeholders for rewards, responsibilities, rights, the procedures for solving disputes whenever they arise and the supervision of the company’s duties and responsibilities. The governance also ensures that there is free flow of information that serves as a system of checks and balances(Fernando, 2009).

Some of the best governance practices principles include those that have an ethical approach, balanced objectives, every party plays his part, decision making process put in place, equal concern for all the stakeholders involved and there is transparency and accountability. The governance ought to put in place the cultural practices of the society involved and those of the organization. In regards to the balanced objectives, all the goals of the parties involved should be harmonized and met. Everymember in the group is expected to know, appreciate and understand the role that they play in the team and do the work that is given to them diligently without any supervision. Additionally, the framework of decision making should be clearly defined so that everyone knows the scope of which decisions are made. There should be equal concern for all the stakeholders even though there are some who carry more weight than others. All stakeholders should know what is happening in the company and work towards achieving their goals. Everything regarding the company should be transparent to all the stakeholders(Colombo Stock Exchange, 2013).

There are four theories that explain the corporate governance. There is the agency theory, stewardship theory, sociological theory and stakeholder theory. The agency theory suggests that there are the stakeholders, who are the company owners, select managers of the company and assume that the managers will carry out their objectives. However, this does not always happen, and the managers may not always perform their duties as per the wishes of the stakeholders (Fernando, 2009)). Whenever there is a conflict of objectives between the owners and the managers is known as an agency problem. The cost to be incurred or that is lost in this process is known as agency cost. The stewardship theory assumes that there is no conflict between the stakeholders and the managers of the company. The stakeholders assume that the managers are trustworthy individuals who value their best interests and their reputation in the industry. The more a person values their reputation, the more they are seen to be trustworthy. The managers are not driven by their own personal goals but are rather stewards for the goals of the owners. The stakeholder theory assumes that the company is an input-output model where all the people in the company either add something to it or remove something from it. This theory however is not commonly used. The sociological theory mostly concentrates on the composition of the board and the implication of wealth and power distribution in the society. In this theory, the composition of the board, disclosure, financial reporting and auditing are important for ensuring that there is equity and transparency in the society(Skemes, 2009).

The board of governance is the ultimate decision making body in the company while the managers only act as the stewards of the goals of the stakeholders. Every company has to keep the interests of the society in which it exists are met. Every company has the responsibility of taking care of the community in which it exists. It should have the improvement of the entire nation at large. Additionally, it is never appropriate to be affiliated with any political party (Colombo Stock Exchange, 2013). This is to avoid any bias by a section of the community who have affiliations to a different political party. The corporation should not directly fund the activities of a specific political party, and if it has to, good governance suggests that the political party involved has to reflect the values of the company especially on the issues if transparency. The company also has to ensure that it follows the legal structure of the law and all its activities are fair and transparent. In this way they can be trusted by the entire community and that, it gains proper recognition within the community. Every officer in a corporation should hold high ethical standards. There should be no cases of corrupt or unjust activities. The corporate has a social responsibility in ensuring that the community is doing well and that they take part in the issues that affect the community. The corporation also has to take care of the environment that it is within. It has to conserve nature in which it exists. It is part of the social corporate responsibility(Fernando, 2009).

In an effective board of governors, the members of the have to be elected to ensure that even the minority shareholders can play a part in managing the company. The CEO of the company cannot be the chairman of the board so as not to have any effect in the selection and appointment of the members of the committee. A majority of the board members should not occupy other seats in the company. Members of the board should never interlock. For instance, the CEO of a company A should not serve as a board member of company B whereas the CEO or head of company B should not be a board member of company A. In this way, there are no conflicting interests. The compensation of the directors should not be so high and not be a regular salary. Each country has its own rules regarding companies. A country that has strong investor protection normally has better access to financial markets. This is because the money markets are assured that the investment is not likely to get lost. They also have low access to equity, increased money liquidity and less noise in stock prices. In the case that a company was to be liquidated, then the first people to be paid would be the creditors of the company. The next people to be paid out would be the preferred stakeholders and then finally the rest of the stakeholders(Colombo Stock Exchange, 2013).

References

Colombo Stock Exchange. (2013, September 4). Code of Best Practise On Corporate Governance. Retrieved June 6, 2014, from Colombo Stock Exchange: http://www.applied-corporate-governance.com/best-corporate-governance-practice.html

Fernando, A. C. (2009). Corporate Governance: Principles, Policies and Practices. India: Pearson Education.

Skemes, K. (2009, January 2). International Corporate Governance Network. Retrieved June 6, 2014, from Global Corporate Governance Principles: https://www.icgn.org/best-practice

Corporate Governance

Order Description
OUR COMPANY IS BARCLAYS PLC.

ACC3165 Coursework Assignment II – (35% of final mark)
Prepare a less than 3,500-word (excluding bibliography and appendices) group REPORT on a selected UK company from the FTSE100 by, addressing the following aspects:
1. Introduction (10%)
a) Briefly discuss the key themes/purpose of the report and the structure of it.
b) A brief background to the selected company, such as the company’s size, scope of operations, industry and competitors.
This section should not be more than half a page long.
2. Social Reporting (40%)
a) Why companies report social information/discharge of accountability (10%)
Accountability/transparency debate by Gray, Adam and Owen (1996) and Roberts (2009)
b) Theoretical Perspectives/framework (15%)
You need to choose your theoretical framework (with reference to the key as well as up-to-date academic literature), discussing which theories you have chosen and why to analyse the social reports of your chosen company. In doing so, you need to discuss why companies choose to report social information in the absence of regulatory requirements and which theories do you choose to analyse the content of the sustainability report of your company and why?
c) Critical evaluation of CSR reports (15%)
Point out the key issues related to corporate social responsibility or sustainability reporting. You need to state which CSR standards (such as GRI, AA1000, Global Compact), if any, have been adopted by the company.
Throughout this section, critically evaluate (in the context of your chosen theories) the social information that your company has provided. Are you happy with the evidence? (link with your chosen theoretical framework!!)
3. Stakeholder engagement (15%)
Identify and evaluate the stakeholder engagement techniques the company has employed and critically evaluate the usefulness of these techniques and strategies in discharging their accountability.
(Cooper and Owen, 2007)
4. CSR/Sustainability reporting assurance (15%)
a) How has your company assured its sustainability/social reports? Evaluate the assurance statement
b) Has the assurance statement helped the company discharge its accountability to its stakeholders?

5. Discharge Corporate Accountability (10%)
a) Using your chosen theoretical framework, critically evaluate different aspects of your company’s sustainability report (what you have discussed and presented in sections 2, 3 and 4). In doing so, you need to present discussions of the theory/(ies) that you find relevant here with reference to key as well as up-to-date academic articles.
b) In your personal view, has the company successfully discharged its accountability to is stakeholders and behaved as a socially responsible company?
6. Overall presentation (good spelling, good command of English), correct use of key and up-to-date references, bibliography (10%).
7. FORM D must be submitted together with the report.
Note: Make sure that you choose a company that has an assurance statement. The list of FTSE100 companies can be found in the following link:
https://www.economicshelp.org/finance/ft-100.html
GENERAL PRINCIPLES
1. You must work within the group to which you have been allocated. Do not change groups or “swap” with members of other groups without the prior consent of the module leader.
2. The assignment must be prepared in report format (typed and 1.5 spaced on plain A4 paper), so write succinctly! The above content requirements will form chapters to the report which must also contain a cover page (with the name of the company, group members’ names and IDs), an Index and References etc.
3. The coursework must not exceed the word limit. Use tables and charts to illustrate and facilitate your presentation where appropriate (not essential).
4. Each group will work on a different company which must be a member of the FTSE 100 Index. In order to avoid duplication, each group must register with the module leader which company they have selected for their work.
5. Refer to all sources in the appropriate manner (i.e. correct referencing).
6. You should make every effort to agree with each member of the group on what is expected of them. You may wish to consider writing up a simple agreement that all members of the group should sign at your first meeting. Form D must be completed and submitted with the final report.
7. On receipt of the assignment (before undertaking any detailed work):
a. allocate work appropriately between group members
b. agree times, dates and locations of group meetings
8. A complete draft of the must be shown to me for feedback – otherwise 1% will be deducted from your final mark.
9. You must submit the final version of your coursework assignment online by the deadline.