Khairunnisa Rahinaningtyas Corporate Governance

16/397035/EK/20991

Corporate Governance, Accounting and Finance: A Review

Philip Brown, Wendy Beekes, Peter Verhoeven

Corporate governance is about the governancce of corporations. Corporate governance is

confined to matters that are, or ought to be, within the control of the shareholders and the board. Some
aspects of governance that have a bearing on agency costs are the result of decisions by external
parties. Examples are decisions by blockholders to invest in a firm with a view to influencing its
financial policies.

The accounting literature has tended to focus on issues commonly found in accounting
journals, such as, archival studies of corporate disclosure practices, properties of analysts’ forecasts or
indicators of the quality of accounting numbers, when seen as outputs of the firm’s CG system. The
sheer breadth of the CG literature means it accommodates other views as well, to which we make only
passing reference. Examples are the views taken in the marketing and management literature. Despite
the breadth, and depth, of the literature on CG, as with any academic endeavour there is always room
for improvement, whether it be in the form of better theory, better models, better empirical proxies,
better data, better estimators, better analysis or better interpretations.

There are CG items that remains unchanged, or so called ‘stickiness’ and changes overtime.
Many early studies of CG focus upon one particular governance component, such as the proportion of
non-executive directors or duality (duality is where the roles of CEO and board chairperson are filled
by the same individual). The widely used G-index is a composite measure. Others create normalised
scores of various governance characteristics. Rather than constructing indices themselves, some
researchers rely upon proprietary indices created by firms that rate firms’ CG. There is an increasing
interest in the diffusion of CG codes across countries, with the literature showing that this process is
strongly influenced by political, cultural and economic forces.

Recall that internal characteristics are those that result from the decisions and actions of the
shareholders and the board, such as the constitution and membership of the board of directors and its
committees (audit committee, internal control and internal audit), the structure of share ownership,
financing arrangements, and the form of executive compensation. External characteristics include
monitoring by outside parties such as blockholders and institutional investors, activists and external
auditors, competition and takeovers, regulation and enforcement.
Khairunnisa Rahinaningtyas Corporate Governance
16/397035/EK/20991

There have been the standard requires a multidisciplinary way to deal with CG hypothesis. Be
that as it may, scholastics create speculations to catch what they judge to be the substance of
connections of more prominent enthusiasm to them, so multidisciplinary advances won't come
effectively. Databases should be progressively centered around measures that catch nearby conditions,
for example, the administration courses of action found in keiretsu in Japan or chaebols in Korea, and
it is courageous if not stupid to accept today that 'best' administration rehearses in the United States in
like manner would be 'ideal' in state Kenya, Greece or Indonesia. Progressively complete information
will encourage inquire about in settings where there are more noteworthy office costs and more
prominent change in administration rehearses. Bigger board information will likewise yield
increasingly dependable evaluations of the advantages of better administration practices to the more
extensive network.