Читать книгу Corporate Governance - Quantity Versus Quality - Middle Eastern Perspective - Saleh Hussain - Страница 6

Over the past fifteen years, corporate governance gained continued importance and attention from all stakeholders and those concerned with establishing good foundations. In other words corporate governance evolved from being a boardroom issue to a public concern.

Many countries introduced corporate governance codes regulating the desired corporate practices in companies of all types operating within their boundaries. Some countries opted for gradual introduction of laws and regulations dealing with various aspects of corporate governance, in the hope of adopting a complete code over a period of time.

Corporate governance seminars, conferences and many other forms of gatherings are the evidence of what we witnessed over the past years. The output of these gatherings gets intensified with every announced financial disaster around the world. Financial disasters cause countries to further tighten their corporate governance laws, regulations and compliance requirements.

Have all these actions - issuance of corporate governance codes, new laws and regulations and seminars - reduced failures in companies worldwide? This is a fair question to ask. An accurate response is more difficult to give. It is safe to say that failures would have been much higher in number and intensity in the absence of corporate governance regulations.

Let's think about the difficulties encountered in the practice and implementation of corporate governance regulations.

For corporate governance to succeed, we know that it is dependent on the cooperation of many stakeholders: shareholders, boards of directors, management, government, regulators, clients, financiers, external auditors, consultants and interest groups. With globalization the list of stakeholders also includes foreign investors, financiers and suppliers.

All these stakeholders need quantitative measures and elements of corporate governance but in the process do very little or, at worst, fail to address the requirements of qualitative elements of corporate governance.

We intend in this chapter to highlight both the quantitative and qualitative elements of corporate governance and draw lessons from differences between them for the betterment of relevant CG regulations.

Typically the regulators issue directives and CG codes dealing with the following quantitative issues:

•Laws and regulations of best practice

•Role of shareholders, annual and extra-ordinary assembly meetings

•Formation of the board and number of boards e.g. one or more boards or advisory committees

•Composition of the board - number of members and how many executive, non-executive and independent directors.

•Board charter, duties and responsibilities.

•Board members' responsibilities

•Board committees and number of meetings

•Board remuneration

•Monitoring, audit and controls within the company

•Corporate succession plans

•Risk management and compliance

•Performance indicators

•Reporting and communication

•Disclosure requirements

•Publication of periodical and annual reports

All of the above quantitative issues are important for the good governance of a company and indeed create many new but important posts within each company - financial controllers, risk managers, internal auditors, compliance officers and others. In certain cases these could add to the burden, financially and administratively, of the company and impact its efficiency.

In talking to a number of senior officers of companies about these requirements, some of them indicated that it is becoming difficult for them to strike the right balance between gaining the benefit of these requirements and the ability to implement them. In fact, some claim that their officers spend more time worrying about implementation than actually doing the work they are supposed to do. Some went so far as to say that their sales teams get bogged down in compliance at the expense of generating new business for their companies.

Certainly one cannot generalize such phenomena; nevertheless it is an issue for some companies depending on their size and sophistication.

Other questions that we ask: Are these quantitative regulations really addressing the requirements of CG within the companies? Do they help the corporations make quality decisions? To answer these, let's address qualitative elements of corporate governance and make a comparison to highlight what could be done to improve CG practices. However before doing so, let's examine what is happening in the world as a result of the current crisis.