A Summary On Corporate Governance - 1227 Words

Like de Kluyver argued in his publish (A primer on Corporate Governance, 2009), â€Å"there is a presumption that, in making a business decision, the directors acted on an informed basis, in good faith, and in the honest belief that the action was taken in the best interest of the corporation.† However, even though the bar has been set, the definition of â€Å"best interest of the corporation† is open for every business directors to interpret. In the case of Enron, the rule had been bent so hard that it finally broke. The company was originally established as an energy provider in the US. In 1970s, the CEO of Enron seized the chance of US energy market deregulation and navigated the company into a new and attractive business – energy trading.†¦show more content†¦Because of the massive company structure, when the bubble broke in 2001, a numerous amount of people took the hit. The stockholders of Enron scandal include company employees, board of directors , Arthur Anderson accounting firm, Vinson Elkins law firm, and the general public of the society. There were specific internal control protocols and external audit agreements designed to prevent the tragic from happening. However, just like my classmate Likhita said during the class discussion (Thought and Discourse, September 16, 2015), â€Å"People will always find the loophole†. In terms of internal control failing, first of all, the malfunction of the board of directors would be our primary concern. Enron Board of Directors clearly failed to oversight company operations. In United States Senate Subcommittee report (The role of the board of the directors in Enron’s collapse, Permanent subcommittee on investigations, 2002), committee memebrs indicated that â€Å"The Board witnessed numerous indications of questionable practices by Enron management over several years, but chose to ignore them to the detriment of Enron shareholders, employees and business associates.† Moreover, the Board of Directors directly violated Enron’s code of ethics and agreed the company from trading with several SPE (includes LJM1) run by its own CFO, Andrew Fastow. Such transactions were not designed to generate legit business profit, nor providingShow MoreRelatedcorporate governance1590 Words   |  7 PagesExecutive Summary: Corporate governance is an essential part of modern company operations and management , it relates to business ethics, code of conduct and system to manage a company. However, there are many corporate scandals due to the failure of corporate governance. 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For your lifelong learning solutions, visit www.cengage.com/coursetechnology Visit our corporate website at www.cengage.com Microsoft, Windows 95, Windows 98, Windows 2000, Windows XP, and Windows Vista are registered trademarks of Microsoft ® Corporation. Some of the product names and company names used in this book have been used for identificationRead MoreSplitting the Ceo Chairman1305 Words   |  6 PagesCorporate Governance: Separating the CEO and the Chairman Roles Reference: Millstein Center Publication Name: D O Diary Publication Date: Tuesday, April 14, 2009 Article by : Kevin LaCroix Article summary: Many voices are calling public companies to separate the Chairman and CEO functions and to make this model a default governance structure and many evidences shows advantages of that. 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