Crafting Strategy Corporate Governance Codes

Crafting Strategy

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A vast number of corporate governance codes has been accepted by corporations. Why, then, do major corporations continue to collapse from decisions that emanate in the boardroom - whose impact is felt beyond shareholders?

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Table of Contents

Introduction        3

Corporate Governance        4

What is Corporate Governance?        4

Primary Roles of Corporate Boards        4

Organisation’s Internal Structure        5

Research on Corporate Governance and Collapses        6

Organisation’s Decision Process        7

Importance of Decision Agents        7

Decision Process        7

Corporate Governance and Decision-making        8

Corporate Collapses        9

Management and External Responsibilities        9

Internal Control        9

Corporate Governance Issues        10

Major Codes of Practice from the Seminal Cadbury Report        11

The Report and Corporate Governance        11

Code Recommendations and its Effects on Corporate Behaviour        11

References        13

Introduction

Weick (1993), an eminent social psychologist, said that it does not take much to both become an organisation and to stop being an organisation. Drummond (2012), a professor of Decision Sciences also said the collapse of organisations could be merely like a car crash; that is, one minute an organisation is bowling along, then the next minute its life becomes shattered. In fact, we frequently come across the cases of major corporations collapsing (Ross, 2010), e.g. Enron Bankruptcy (2001), Delta Air Lines Bankruptcy (2005), Lehman Brothers Bankruptcy (2008), Washington Mutual Bankruptcy (2008), and General Motors Bankruptcy (2009). These corporate collapses resulted in investigations and studies in the academia, which of this paper is going to do either. Many of the studies focused most on organisational analyses, which began and ended with decision-making (McWilliams, et al., 2016). Corporate decision-making has been stretched so far along with corporate governance principles (Forbes & Milliken, 1999), as the decision-making process is a highly sacred and sensitive activity done in the boardroom, which is surrounded by ritual and myth. Corporate governance, including those who hold the positions that could bring about final decisions for the organisation, most of the times contribute to collapse of the organisation; the decisions that emanate in the boardroom whose impact is felt beyond shareholders. By exploring literature, reports, and cases, this paper, obviously, tries to study how and why major corporations continue to collapse to such things; decisions.