Corporate Governance in Banking Sector
To what extent are the banks of Mauritius complying with the national code of corporate governance?
CHAPTER 1
INTRODUCTION
Sir Adrian Cadbury (2002) stated that corporate governance is “the direction and control process within an organization”.
Corporate governance is a systematic approach of controlling and monitoring a business operation.
The term corporate governance has came to light in the 19th Century when the theory of separation of ownership and control developed. The idea was that shareholders want the safeguard of their assets and their business controlled by managers and directors. Therefore, they require proper accountability of the financial performance of their business.
Corporate governance examines the decision process in corporations. It can also be defined as a system and process that ensure accountability, probity and openness in the operation of a corporation.
Corporate governance entails the compliance of its various codes of conduct and Government Regulations. As such, companies are required to publish their business activities in their annual reports.
However, some companies in UK such as Polly Peck, Bank of Credit and Commercial Bank (BCCI) and Maxwell group, have failed to meet these required regulations. These firms have failed because the directors were acting against shareholders’ interests.
Most famous corporate scandals have been companies like Enron, WorldCom and Barings Bank. There was poor governance in these companies, which has been the main reason for their failure.
In 1980’s, corporate governance has been a great issue of concern due to big corporate scandals resulting from lack of accountability of board members and weak accounting standards.
Enron, the seventh largest American company, known as the giant energy company, has also collapsed due to lack of control and poor governance. In this case, the members of the directors were falsifying the company’s accounts to show a
CHAPTER 1
INTRODUCTION
Sir Adrian Cadbury (2002) stated that corporate governance is “the direction and control process within an organization”.
Corporate governance is a systematic approach of controlling and monitoring a business operation.
The term corporate governance has came to light in the 19th Century when the theory of separation of ownership and control developed. The idea was that shareholders want the safeguard of their assets and their business controlled by managers and directors. Therefore, they require proper accountability of the financial performance of their business.
Corporate governance examines the decision process in corporations. It can also be defined as a system and process that ensure accountability, probity and openness in the operation of a corporation.
Corporate governance entails the compliance of its various codes of conduct and Government Regulations. As such, companies are required to publish their business activities in their annual reports.
However, some companies in UK such as Polly Peck, Bank of Credit and Commercial Bank (BCCI) and Maxwell group, have failed to meet these required regulations. These firms have failed because the directors were acting against shareholders’ interests.
Most famous corporate scandals have been companies like Enron, WorldCom and Barings Bank. There was poor governance in these companies, which has been the main reason for their failure.
In 1980’s, corporate governance has been a great issue of concern due to big corporate scandals resulting from lack of accountability of board members and weak accounting standards.
Enron, the seventh largest American company, known as the giant energy company, has also collapsed due to lack of control and poor governance. In this case, the members of the directors were falsifying the company’s accounts to show a
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