Stakeholder Theory Of Solomon: Corporate Governance And Accountability

Satisfactory Essays
Solomon ( Corporate Governance and Accountability) defined corporate governance as the System of balance and checks, both internal and external processes that guarantee to the companies bear the accountant responsibility to all shareholders and perform in a liable way in all areas of its commercial activity.

There are differents theoretical frameworks such as Agency and Stakeholder theory to understand and analyse governance corporative, each of these frameworks are slight different in some how, however it guides to a better understanding on the subject.

Corporate governance is as guideline of principles systems and processes by how companies should be directed and controlled so as to achieve their goals and objectives, known as the agency
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The stakeholder theory stants that large companies have a higher impact in the society, it sets that they are more than just shareholders, they should discharge their accountability not only for their stakeholders but as well as to several sectors of the society. In addition, it is a combination of agency theory and stakeholder theory law and codes of governance developed by governments all have an effect on the combined code and reports of corporate governance.

To develop a new Corporate governance report, there are a few stages to be followed, such as a formation of Committee where it will be written the terms of references based normally in public failures; the Committee will engage on a long discussion about the reports and new premises; the committee will gather all the information discussed and build a report, there is a presentation of findings, learnings and further actions towards those learnings and there will be debates and then the implementation of the code or
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The majority of the International reports and Corporate Government
Codes has originated from the beginning of a recension, financial, or economic crisis.

From a corporate governance and risk management perspective, their report investigated the credit crunch, understanding the main causes and what contributed to the baking clash, headlining the importance of reliable risk management tools. Summarising the corporate governance failures, Moxey and Berendt believed that the main factor that led to the credit crunch, were:

companies failed managing the interrelationship between general business risks and remuneration incentives;
Remuneration and bonuses policies aided a disproportionate number of short-termism owners. Which did not hold a prudent risk management and the interests of long term associates;
The risk management department in banks did not have any influence influence power and had weaks reportings on risk and financial transaction.
A gap of accountability in companies and between them and their
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