Journal entry example article 1
article 1
These are the questions that you need to address
What are the corporate governance issues in this article?
What are the relevant theories used to describe how corporate governance applies to this article?
Apply the theory to draw a valid conclusion.
What are the practical implications of this event?
For My article this is what I said (this is not perfect, just a guide)
1) Failure of banks to meet regulators governance requirements including internal, auditing, risk management and succession planning. Failure to define and communicate the banks appetite for risk and directors unwilling to challenge the CEO.
2)
Agency theory emphasises the monitoring role of the board. We therefore need directors independent of management (i.e. directors that have not been elected by the CEO or who are part of management) to question and investigate the CEO's managerial decisions, such as, are we entering areas that are too risky? What level of risk are we prepared to take?
The article also refers to stakeholder theory in the comment that the boards have a fiduciary duty to the wider community and employees.
3) The article points to the regulators failure to monitor banking practices a further indication that agency theory can be used to explain the role of governance. Unchecked behaviour can lead to corporate failures including the failure of an entire sector as in the GFC. We need tighter controls to ensure the security of invested assets. Stricter regulation? Is this the solution?
http://www.moneynews.com/FinanceNews/big-banks-corporate-governance/2013/02/18/id/490834
These are the questions that you need to address
What are the corporate governance issues in this article?
What are the relevant theories used to describe how corporate governance applies to this article?
Apply the theory to draw a valid conclusion.
What are the practical implications of this event?
For My article this is what I said (this is not perfect, just a guide)
1) Failure of banks to meet regulators governance requirements including internal, auditing, risk management and succession planning. Failure to define and communicate the banks appetite for risk and directors unwilling to challenge the CEO.
2)
Agency theory emphasises the monitoring role of the board. We therefore need directors independent of management (i.e. directors that have not been elected by the CEO or who are part of management) to question and investigate the CEO's managerial decisions, such as, are we entering areas that are too risky? What level of risk are we prepared to take?
The article also refers to stakeholder theory in the comment that the boards have a fiduciary duty to the wider community and employees.
3) The article points to the regulators failure to monitor banking practices a further indication that agency theory can be used to explain the role of governance. Unchecked behaviour can lead to corporate failures including the failure of an entire sector as in the GFC. We need tighter controls to ensure the security of invested assets. Stricter regulation? Is this the solution?
http://www.moneynews.com/FinanceNews/big-banks-corporate-governance/2013/02/18/id/490834