Rationale for the Chosen Corporate Governance Factors

Table of Contents

Executive Summary ………………………………………………………………………... 2

1. Rationale for the Chosen Corporate Governance Factors ……………………………. 3

2. Assessment of the Corporate Governance System of the Selected Company….……... 3

2.1 Facebook ………………………...………………………………........................ 3

2.2 Commonwealth Bank of Australia.……………………………………………. 7

2.3 Tesco ………………………………………………………………………….......9

2.4 Tata Motors …………………………………………………………………......11

2.5 Fast Retailing ………..……………………………………………………….....13

3.  Conclusion……………………………………………………………………………....17

Appendix .…………………………………………………………………………………. 18

Bibliography ……………………………………………………………………………… 23

Executive Summary

The need for solid and sound corporate governance practice has become increasingly important in recent years, as the recent high profile corporate collapses (Enron, OneTel) are related to poor governance structure. The Corporate Governance Assessment Model attached in the appendix outlined five significant factors that can assist in determining the level of corporate governance of the selected firms. These include:

• Appropriate Board Structure And Composition
• Management Compensations
• Integrity in Financial Reporting
• Effective Risk management
• Corporate Social Responsibility

Selected companies are likely to have a well-established corporate governance system if the selected companies achieve high ratings in these corporate governance factors.

This report will apply these five factors to each corporation including Commonwealth Bank of Australia, Fast Retailing Co. ltd, Facebook, Tesco Plc. and Tata Motors Ltd.   Based on our evaluation, selected companies have failed to meet certain criteria in our measures of the Assessment model. For example, both Facebook and Fast Retailing’s board lack independence, they do not separate the role of chairman and CEO; CBA and Tata Motors needs to established environmental sustainability policy and have a better disclosure on ethical, social and environmental related issues. As for Tesco, they need to introduce a pay structure to encourage executives to focus on long-term successes of the firm. Overall, based on our Ratings of the Corporate Governance Assessment Model, Commonwealth Bank of Australia has the best corporate governance while Fast Retailing is on the other side of the scale.