Chapter 15: Emerging Issues in Corporate Governance

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Chapter 15 Emerging Issues in Corporate
Governance

• L. Murphy Smith
• Texas AM University

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Chapter 15 Emerging Issues in Corporate
Governance
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Chapter 15 Emerging Issues in Corporate
Governance Global Financial Markets
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Chapter 15 Emerging Issues in Corporate
Governance
Global Financial Markets
The speed with which financial transactions can
be conducted and money can be moved around the
world encourages regulators to establish a global
financial infrastructure. Different types of
corporate governance structure are exposed to
different financial misconduct and scandals. For
example, the dispersed ownership system of
governance in the United States is prone to
earnings management schemes (e.g., Enron,
WorldCom), whereas concentrated ownership systems
are more vulnerable to the appropriation of
private benefits of control (e.g.,
Parmalat). Convergence is needed.
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Chapter 15 Emerging Issues in Corporate
Governance Accountability The New Business
Imperative
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Chapter 15 Emerging Issues in Corporate
Governance
Social, Environmental, and Ethics Performance
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Chapter 15 Emerging Issues in Corporate
Governance
Social, Environmental, and Ethics Performance
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Chapter 15 Emerging Issues in Corporate
Governance Challenges Facing Directors
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Chapter 15 Emerging Issues in Corporate
Governance Global Financial Reporting
Revolutionary changes are occurring in accounting
and financial reporting in the US and other
countries. Until 2008, the Securities and
Exchange Commission (SEC) in the US required for
financial reporting by companies traded in the US
stock market, that their financial statements
either follow US generally accepted accounting
principles (GAAP) or be reconciled to US GAAP.
The SEC did not accept the International
Financial Reporting Standards (IFRS) issued by
the International Accounting Standards Board
(IASB). Until the early 2000s, securities
commissions in most countries took the same basic
position toward IFRS as did the United States
SEC. Pivotal events in recent years include
acceptance of IFRS for financial reporting in the
European Union in 2005 and the US Securities and
Exchange Commissions announcement in late 2007
to accept IFRS for financial reporting by non-US
firms trading in US markets. Teamwork How far
away is worldwide acceptance of IFRS for
financial reporting?
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Chapter 15 Emerging Issues in Corporate
Governance Summary
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Chapter 15 Emerging Issues in Corporate
Governance Summary -- Continued