Carnegie and O’Connell - Corporate Governance Assignment

Internal Code: MAS3835

Corporate Governance Assignment:

The problem stems from the numerous corporate collapses throughout the world and the lack of corporate governance in controlling the extreme risk-taking chief financial officers and/or board members (Carnegie & O’Connell, 2013). Carnegie and O’Connell further argued that many of the corporate collapses involved accounting and audit failures and the lack of corporate governance and these are inter-related. Corporate governance research involving the underlining failures has been highlighted in recent years, particularly after the Enron scandal in 2001(da Silveira, 2013). The collapse of HIH Insurance further highlighted the need for studies and research into corporate governance (Mirshekary, Yaftian, & Cross, 2004). These two cases emphasize the need for research into the interactions between the CEO and the board members because these controls and communications incorporate the control mechanism used by board members over the CEO. The Sarbanes-Oxley Act (SOX) was introduced to combat these types of corporate failures through fraudulent activities. There are numerous other corporate collapses throughout the world in which these factors of risk-taking by the CEO and/or a problem with the board of directors as evidenced in numerous cases (da Silveira, 2013).