Corporate governance is one of the most effective tools to reduce the incidence of corruption, especially in the corporate sector. Corporate governance is concerned with process, systems, practices and procedures that govern institutions, the manner in which these rules and regulations are applied and followed, the relationships that those rules and regulations determine or create, and the nature of these relationships.
Prempeh (2002) indicates that Sound Corporate Governance encourages the efficient use of resources and provides for accountability for the stewardship of those resources. Corporate Governance can also create safeguards against corruption and mismanagement while promoting fundamental values of a market economy in a democratic society. Some democratic values include accountability, transparency, and rule of law, responsibility and property rights. Some principles of Corporate Governance include; the rights of shareholders and key ownership function, the Equitable Treatment of shareholders, and disclosure and transparency. The purposes of this paper emphasis on the Regulatory frame work in the Republic of Ghana in compares with the United States Regulations.
Corporate Governance in the world has received both increased attention and scrutiny in the 21st century, after a series of financial reporting and corporate governance scandals such as Lehman Brothers, WorldCom and Tyco shook the US securities markets and more recently with the collapse of Bear Stearns that set off a serious global financial crisis.
In Ghana, the cases of Pyram, Bank for housing and construction and the CAL Bank raise alarm on the regulatory frameworks practiced in Ghana.
General regulatory framework in Ghana
According to the World Bank’s 2005 Report on the observance of the standards and codes on Corporate Governance in Ghana, Ghana’s capital market development has shown potential for improvement. However, challenges remain because of its weak institutional foundation as well as capacity and enforcement gaps. The 2005 World Bank reports that the improvements in Ghana’s capital markets are more dependants on increasing the institutional capacity of the regulators, administration and judiciary than on reforming the legal framework. Businesses do not promote an ethical, responsible and transparent corporate governance environment, retail investor awareness is practically nonexistent, institutional investors are not very involved, and majority shareholders tend to control the boards and overshadow smaller investors. A number of factors discourage medium and large firms from listing, including possible loss of control, cost of listing transparency, and accountability.
In Ghana, the Company’s Act serves as the immediate regulatory regime. It is the duty of the registrar to enforce compliance with the Act. The compliance involves routine inspections, queries raised, sanctions applied and enforced.
The Bank of Ghana is another regulatory body which ensures financial institutions is charged with the responsibility of seeing to it that the universal banks conduct themselves within the case work of rules and regulations that govern their activities. They also ensure 1.do not exceed their limits in amounts for advancing loans facility 2.have licenses for operations
3.regulate foreign exchange reserves
4.limits amounts of deposits
5.Have minimum operating amount of money and the do not fall below it.
General regulatory framework in the United States
According to a Kenyon and Vitols (2004) the United States regulatory system operates at three institutional levels; Federal, State and Market.
The paper reveals that, in the past, the Federal government was primarily responsible for securities market regulation, state government set corporate law and self regulation took precedence over government intervention in certain areas. The corporate scandals in the early 2000s, led to the enactment...