The collapse of the companies like Enron and WorldCom alerted the stake holders to make the control measures more stringent which are capable of ensuring that the frauds are detected at an early stage before things go out of control and coerced them to take more responsibility in corporate actions. To quote James Wolfensohn "Corporate governance is about promoting corporate fairness, transparency and accountability". All the stakeholders like the share holders, Board, senior management, employees, suppliers, creditors, etc who have wagered on its performance have great responsibility to monitor the actions of the company. The company policies should be capable of generating revenue through the performance of fair activities for its income generation. The role taken by share holders in corporate governance saw a transition in the recent years. With the stake of institutional investors being on the rise, they can avail the services of experts to scrutinise the annual statements of the company to find the method of operation adopted by the company. Their expertise and business acumen in the various fields can bring intelligent questions regarding the working of the company during the annual general meetings. Sir George Adrian Hayhurst Cadbury, the pioneer for inculcating corporate governance, in his report is said to have stated, “‘Institutional investors should encourage regular, systematic contact at senior executive leve1 to exchange views and information on strategy, performance, board membership and quality of management’ (report, 6.11)”. The idea of contact between the company and the institutional investors is said to have been put forth by the joint City/Industry working group chaired by Mr. Paul Myners who recommended the fund managers to suggest their investment strategies to the senior management and get proper training from the company for ‘industrial and commercial awareness’. The role of management, especially the Board of Directors in corporate governance is immense as they have the control over the resources of the company and has the power to scrutinize its modus operandi. The management is expected to ensure that the actions taken are in the best interest of the company as expected by the various regulatory and statutory bodies. As the decision making power of the share holders are in the hands of the management, the Board has to ensure that the power is channeled to the development and attainment of the overall objectives of the firm. The Board has to take an active part in ensuring that the appointment of the key players and their remuneration are satisfactory. The company policies must not have room for incompetence or fraud. They should be willing to provide the share holder any information within their limits to review the business operations. It is the duty of the Board to promote ethical behaviour within the entity. A corporate governance committee can also be appointed to keep watch over the actions of the company. For example, SAP follows a German system of corporate governance where the committee consists of members from the shareholders, an Executive Board consisting of 7 members and SAP Supervisory Board consisting of 16 members of the work force of which 8 is elected by the shareholders and 8 by the employees. A normal committee is to scrutinize the suitability of the company policies and actions to the stake holders’ interest. They monitor the performance of individual directors, their remuneration policies, succession planning, etc. After the WorldCom’s fall, many stakeholders in US had staged revolts for their rights. For example, the labour unions of American Airlines who agreed to salary reduction which was the outcome of the negotiation attempted by the then Chief Executive and Chairman, Don Carty, to help the company stay out of bankruptcy, planned to suspend their agreement unless Don Carty resigned, on hearing that Carty had planned to protect the retention bonuses and pension plans of the top executives. Thus corporate governance is the responsibility of all the stake holders to safeguard their interest.
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