Ethically Conducted Business Benefit

Business ethics is concerned with moral philosophy, truth, Consultants fairness and justice pertains to the code that guides the professional conduct of aspects such as the expectations of society and customers, social responsibility, consumer autonomy and corporate behavior in global and domestic markets (Rasmusse, 2005).Advertising We will write a custom essay sample on Ethically Conducted Business’ Benefit specifically for you for only $16.05 $11/page Learn More Corporate social responsibilities mean those activities that a business does to improve the living conditions of the society that the business is conducted. With globalization and increase in people awareness of their rights, there have been calls for conducting business ethically. Pablo, in the â€Å"Journal of Business Ethics applauds the ethical behaviors within an organization; ethics in business means conducting a business in socially, economically, politically and environmentally friendly manner (Pablo, 2008). This paper discusses the relationship between law and ethical business behavior. The relationship between law and ethical behavior Ethics are moral standards code of conduct that a person or a company uphold; law on the other hand represent the legal pathway that an organization should follow to be operating within a certain economy. Just like business law, codes of ethics are not international but vary between individuals and companies. People, who uphold ethical reasoning in their actions, do not fail into transgression; they neither find themselves in the wrong side of the law. People who uphold high respect for their ethics not only do the right thing and have peace of mind; but also are also able to transform episodes of temptations to their benefit. They are also able to influence other people to an acceptable behavior. Organizations code of ethics defines how an organization responds to internal or external stimulus. In most organizations, they are in blue prints and an internal policy. They form part of organizational training needs. Organizations that uphold high respects for their code of ethics maintain good internal and external relations with their stakeholders (Kingsolver, 2008).Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Laws that operate in an economy are supposed to offer the pathway and directions of the morally and ethically accepted behavior that businesses are supposed to uphold; this does not imply that all ethical behavior have a legal backing. According to utilitarian theory of ethics, it puts weight on the individual who is undertaking a certain duty; the same way with laws, despite some laws focus a industry, they are applicable at an individual level, individual may mean natural or artificial person (Moon, 2001). The focus here is not the consequences like the case of Consequentialism theory, but on the p eople who are involved. It is based on the motive or the character portrayed by the person who has made a certain action. The most important thing in this theory is the development of the desired right virtues that an individual should have at all times. It follows the same approach as legal laws and rights that a countries constitution offers to its citizens. The virtues should dictate/influence the kind of decision that a company takes. The pleasure that a certain action is going to give, and to the number of people who are going to get the pleasure is the main concern; If an action is thought to bring more pleasure to a large group, this is the correct thing to do given the available alternatives. The value and the worthiness of the action is the most important thing. This is a theory where majority rules. This theory puts more weight on the inner feeling of the individual; the physical products are not of great essence. It is seen as the theory of quality and not quantity (Darwa ll, 2002). Another ethics theory is called norm theory; this means conducting the business in a way that the greatest majority would accept and find normal. If somebody or a company is doing something, then the entire population needs to be comfortable with the actions/decisions and the outcomes of the decisions made.Advertising We will write a custom essay sample on Ethically Conducted Business’ Benefit specifically for you for only $16.05 $11/page Learn More This theory places some relevance to the culture that a certain society holds; the business should be in line with the culture of the society. This will determine the success of the business. The set of beliefs and the way people do things is of importance to the entire performance of the business. If the society believes that doing something is right, then a wise investor is the one who does things in line with this belief. He should at all times ensure that the business is in line with th e culture. The approach taken by norm ethics theory is similar with the approach taken by laws of a country (Dobson, 1997). Can illegal behavior possibly be ethical? There cannot be right answer to the above question; the answer is always subjective to the person who is discussing and the angle at which he or she finds things; the answer is entirely subjective since ethics is a personal attribute that is special and varies with individuals. The situation of the matter can also lead to ethical actions that are illegal. For example in the case of a country that has political conflicts, that hinders the importation of medication into the country, yet the population is suffering; if in any case, someone decides to smuggle in medication, then the person has acted ethically. When smuggling the medication, he has the aim of assisting the population that is ethically accepted. On the other hand, smuggling of whichever nature is illegal and punishable by law. Another example that can assist in expanding the fact that ethical behavior can be illegal is Smuggling refugees out of war-stricken areas; the smuggler is looking forward at assisting people who might probably die, however the fact that he is assisting people with no legal permission to get to another country makes the deal illegal. In politics depending with where a certain person stands, the issue can also be seen as ethical yet illegal; for example an assassination of malevolent dictators, may be ethical from the angle of the assassinators while its unethical and unlawful on the side of supporters.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More There are sometimes that some ethical behavior has no legal baking, for example if an investor wants to set up a pork butchery and goes ahead to start one in a Muslim society, the business is more likely to fail on the basis that the residents will see it as unethical and against their cultural and religious believes. This is because the norm of the religion, which happens to go in line with their culture, does not consider the business as ethical; however the above act is legal and acceptable (Jones, Parker Bos, 2005). Examples of companies with strong corporate social responsibilities functions Mitsubishi is an international company that is respected for its value of corporate social responsibilities programs. The company established a full office to deal with corporate citizenship in April 2004; the office is called Corporate Citizenship Promotion Office: the office was given the mandate of enacting policies that the internal business a chance to improve its processes so as it r educes any adverse effect on the people. The office operates under an acronym called STEP, which means: S: Support for the next generation: the focus is on developing young people to improve their future T: Traffic safety: the company has traffic rules training programs where it teaches drivers, potential drivers and schoolchildren on how to be safe; in line with safety, the company makes reliable vehicles E: Environmental preservation; the company has embarked on some environmental conservation policies and activities P: Participation in local communities: the company has resources set aside to address some needs in the community like health promotions, schools buildings and stocking, promotion of games among others. Another company respected for its effective CSR programs is Toyota motor company: the company realizes that its success is dependent on the loyalty that they get from their customers, one of the ways of ensuring that they get customers attention and loyalty to the comp any eventually develop. The responsibilities that the company has engaged in include, building of medical centers and hospitals, building schools, scholarships to students and charity work. An example of this area the numerous projects that the company is undertaking in Kenya, Africa they include; During the tree planting season in Mau forest, Toyota Kenya played a major role in offering sponsorship. It has been participated actively in the ongoing companies to eradicate poverty. In doing so, it has offered many young Kenyan in accessing mechanic training at an affordable rate. Emirates Airline Corporation is another international company that is respected for its respect for corporate social responsibilities; the company embarks on societal improvement programs like sponsoring sports, rallies and protection of environments activities. This is in the effort of creating a good repo with customers across the globe (Goodman, 2009). A corporate social responsibility costs a company some fortune, the company have to pay for the expenditure and expect nothing more that good business environment creation. However, businesses with good corporate social responsibilities benefit in the following ways, when a business is ethical, then ethical programs start internally where employees who are respected by their employer produce more effectively and highly than those who are not respected. An organization thus gains high efficiency and effectiveness in its processes. From the external angle, the business develops good relations with its customers. When there are good relations, there is customer loyalty; loyalty of customer is a strong marketing and competitive advantage tool that leads to increased business. The close relationship between customers and businesses as created by corporate social responsibilities programs makes businesses mitigate strategic risks; they are more assured that they will make it in the fiancà © business environments of current business world (D uska, 1999). Conclusion Business ethics refers to conducting business in socially, economically and politically acceptable manner. It aims at developing good internal and external relations; they have close link with laws of a country but in some instances, it is possible to have an ethical action being unlawful. Ethically conducted business benefit an increased competitiveness and customer loyalty as well as reduced business strategic risks. For a business to have ethics in its production, it should start by developing a code of conducted to be adhered by all personnel’s in the organization, training employees on ethical codes of conducts and reviewing the ethical codes with time. References Darwall, S. (2002). Consequentialism. Oxford: Blackwell. Dobson, J. (1997). Finance Ethics: The Rationality of Virtue. New York: Rowman Littlefield Publishers, Inc. Duska, R. (1999). Employee Rights. Oxford: Blackwell. Goodman, C. (2009). Consequences of Compassion: An interpretation an d Defense of Buddhist Ethics. Oxford: Oxford University Press. Jones, C., Parker, M., Bos, R. (2005). For Business Ethics : A Critical Text. London: Routledge. Kingsolver, A. (2008). Capitalism. Encyclopedia of Race and Racism. Detroit: Macmillan. Moon, C. Et al.(2001). Business Ethics. London: The Economist. Pablo, R. et al.(2008). Business Ethics Journal Rankings as Perceived by Business Ethics Scholars. Journal of Business Ethics 95(2), pp. 227-237. Rasmussen, L. (2005). Ethics expertise: history, contemporary perspectives, and applications. Netherlands: Springer. This essay on Ethically Conducted Business’ Benefit was written and submitted by user Britney N. to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.

13 Colonies Report Essays

13 Colonies Report Essays 13 Colonies Report Essay 13 Colonies Report Essay This is a report about the 13 colonies. First I will be talking about all the 13 colonies. Then I will be talking about one specific colony, Virginia. When I talk about Virginia, I will tell you about their migration, reason for migration, Native Americans, and more. So get ready for a report about the 13 colonies. 13 COLONIES There are 3 sets of England colonies with 13 colonies in them. The first colony is the New England colony which consists of Massachusetts, New Hampshire, Rhode Island, and Connecticut. The second colony is the middle colonies which consist of New York, Delaware, New Jersey, and Pennsylvania. The final colony is the southern colony which consists of Virginia, Maryland, North Carolina, South Carolina, and Georgia. These colonies are located along the eastern coast next to the Atlantic Ocean. VIRGINIA’S MIGRATION AND REASON FOR MIGRATION Virginias earliest European immigrants were English- only a few hundred at first, but 4,000 between 1619 and 1624, of whom fewer than 1,200 survived epidemics and Indian attacks. Despite such setbacks, Virginias population increased, mostly by means of immigration, from about 5,000 in 1634 to more than 15,000 in 1642, including 300 blacks. Within 30 years, the population had risen to more than 40,000, including 2,000 blacks. In the late 17th and early 18th centuries, immigrants came not only from England but also from Scotland, Wales, Ireland, Germany, France, the Netherlands, and Poland. In 1701, about 500 French Huguenots fled Catholic France to settle near the present site of Richmond, and beginning in 1714, many Germans and Scotch-Irish moved from Pennsylvania into the Valley of Virginia. VIRGINIA’S CLOTHING The clothing illustrated in this article was worn by living people who had much in common with us. Not only did people then respond to fashion, they also varied their garments based on the activity and the formality of the occasion. The eighteenth-century words dress and undress had meanings quite different from the way we use the words today, though the basic concepts are still viable. Dress clothing meant formal clothing with a different set of conventions and accessories from undress, or informal clothing. In 1775, for example, a woman could still wear a pair of side hoops, or panniers, to support her wide skirt for a dress occasion, while her undress clothing ;although it would appear quite formal to our eyes, had a more modest skirt size that may not have needed hoops at all. Similarly, the clothes in which a wealthy planter conducted his daily business differed significantly from what he wore to a ball at the Governors Palace. The garments worn by a blacksmith or dairymaid for daily work were different from their best outfits, reserved for Sundays at church and infrequent special occasions. VIRGINIA’S HOME LIFE Within a few decades of Jamestown, Virginia was a society with slaves, but it was not yet a slave society. As late as 1640 there were more Africans in New England than Virginia. Only after the supply of European indentured servants declined in the late 1600s the tobacco planters turn increasingly to enslave Africans. In the mid-1600s, before social and racial hierarchies hardened, the slave Anthony Johnson- the black patriarch of Pungoteague Creek on the Eastern Shore- could gain his freedom, acquire a farm, and own a slave himself. But, by the late 1600s, Virginia began passing laws that made hereditary slavery binding on Africans, mulattoes, and some Indians. Virginia slaves came from many different parts of Africa, where they spoke different languages. Once in the colony, they had to learn English to communicate with each other. But they developed a distinct dialect that became the vehicle of a unique culture. By 1776, Virginians from Africa were 40 percent of the population. Various African cultural traditions, including food and cooking preferences, music, dance, vocabulary, religious and healing practices, and folklore mixed to form a new culture that strongly affected white culture as well. VIRGINIA’S RULES AND LAWS Virginia in the 1600s and through most of the 1700s was an extremely in egalitarian society like the Stuart England that produced it. This was the result of conscious choice, largely the vision of one man- Sir William Berkeley- royal governor from 1642 to 1652 and from 1660 to 1677. When he ssumed authority in Virginia, the colony was a society in flux in many ways. Sir Williams ideal society was authoritarian, like the one he had known at home. It would have a few ruling gentry families, a small class of yeomen farmers, a larger group of white tenant farmers, and at the bottom, numerous indentured servants (and eventually enslaved Africans). Social mobility would be at a minimum, and everyone would know his place. These plans were hindered by the staggering death rate in early Virginia, which made for a highly fluid, unstable society. But as death rates dropped in the late 1600s, and slaves replaced troublesome indentured servants, Berkeleys goal was largely achieved. Thereafter, the colony was run by and for a small governing elite. This class ruled Virginia until after the American Revolution. Ironically, many scions of these dynasties would be the leaders in the rebellion against King George III. VIRGINIA’S NATIVE AMERICANS All of the Commonwealth of Virginia used to be Virginia Indian territory, an area estimated to have been occupied by indigenous peoples for more than 12,000 years. Their population has been estimated to have been about 50,000 at the time of European colonization. The various peoples belonged to three major language families. The Algonquian who were on the coast, and Siouan and Iroquoian who were in the interior. In addition, about 30 Algonquian tribes were allied in the powerful Powhatan Confederacy. VIRGINIA’S REASON FOR SETTLEMENT The Jamestown Settlement Colony was the first successful English settlement on the mainland of North America. Named for King James I of England, Jamestown was founded in the Colony of Virginia on May 14, 1607. In modern times, Jamestown Settlement is also a promotional name used by the Commonwealth of Virginias portion of the historical attractions at Jamestown. It is adjacent and complementary to the Historic Jamestown on Jamestown Island which is the actual historic site where the first settlers landed and lived that is run by the National Park Service and Preservation Virginia. Jamestown was founded for the purposes of a quick profit from gold mining for its investors while also establishing a permanent foothold in North America for England. Jamestown followed no fewer than eighteen earlier ailed attempts at European colonization of the North American mainland, including the famous Lost Colony â€Å"at Roanoke Island in what is now Dare County, North Carolina. Other successful colonies in North America were in Spanish dominions such as New Spain, New Mexico, and Spanish Florida. VIRGINIA’S LAND When Christopher Columbus landed on the shores of what Europeans called the New World , or, more precisely, the West Indies, he believed he had found a new trade route to Asia. The first English colonists arrived in North America in 1584 at Roanoke Island, in what is now North Carolina. The next year, a group of these settlers explored southeastern Virginia. The first English colony in North America that managed to survive began at Jamestown in 1607. Although this settlement also ran out of supplies and nearly abandoned in 1610, it later grew as increasing numbers of colonists arrived. Led by Captain John Smith, the settlers immediately explored the surrounding country, traveling up the James, York, Rappahannock, and Potomac Rivers as far as the fall line. They observed and wrote about the many villages and natives they met. Smith published an accurate map of the Coastal Plain of Virginia, marking the villages the scouting party discovered. CONCUSION This was a report on the 13 colonies that focused on Virginia’s rules and laws, Native Americans, land, and more. I used several resources, internet based as well as books to find my information. In this process I learned how the Virginia colony was formed and about the original settlers. I chose Virginia because of the Jamestown settlement and how the colony mysteriously disappeared. This was my report about the 13 colonies and I hope you liked it.

Organisations and behaviour Assignment Example | Topics and Well Written Essays - 2500 words

Organisations and behaviour - Assignment Example The production efficiency methodology explains the method that breaks every action or small tasks into very simpler forms which can be evaluated easily and can be taught. The four principles of the theory are: 1) maximize individual skill and minimize job learning period, 2) design work, matching it to the workers, 3) monitor the performance of the worker and ensure that they are using the right method of working, 4) replace the thumb rule and in that place use the scientific method of work study (Sapru, 2013). Hawk Car Company initially adopted the Taylor method which brought them a lot of problems which are follows: The theory gave importance to productivity and profitability as a result there aroused exploitation of employees in the company. Taylor emphasized on the functional foremanship which says that one employee has to report to a number of managers and thus it loosens the unity of command which can create chaos and confusion in the organization. The employees at Hawk Car com pany suffered from the same problem The method elaborated by Taylor is mechanical in nature and it laid emphasis on efficiency of the work generated. He failed to take in to account the human element and considered workers as robots. Thus, Hawk Car Company assembly managers failed to understand the difficulties that are faced by the employees but concentrated on the efficiency of the work produced by the workers. ... This explains that the person who is at the top of the pyramid is the person to whom every person in the organization has to report (Nelson and Campbell, 2008). In case of Hawk Car Company, it used a hierarchical organizational structure where the workers on assembly line have no authority to give any suggestion to the design and running of the production line. The chain of command of the production department was such that the effectiveness of operation rested on how the people performed at each level and how they report to their assembly line managers. The scope of biasness may arise and the managers who are not open to feedback from employees create further communication gaps. As a result the workers in the Hawk Car Company lost interest in their work and were highly dissatisfied. The number of absenteeism increased as a result the production was affected. The hierarchical organizational structure can create too much distance between the leaders of the organization and the employe es. When there is too much authority in one hand, power dominates. As a result the employees feel low to work efficiently in the organization as their work is not valued by the management. The employees at the Hawk Car Company faced the same situation. The decision making process in this structure is directed from the top level as a result the employees have little say about the work they are assigned. They are not given the opportunity to express their own idea and process of doing a work. As a result they became less involved with the work they are doing. The employees of Hawk Car Company had no right to make any changes to the work process even if it is needed. Working in an assembly line is very difficult for the employees as it

The New College Try by Jerome Karabel Assignment

The New College Try by Jerome Karabel - Assignment Example He maintains in the article that these institutions serve less as vehicles of upward mobility than as transmitters of privilege from generation to generation and the argument has a national and international relevance today. According to Karabel, â€Å"Today, the competition to get into these institutions is at an all-time high, and this has led to serious problems across the socioeconomic spectrum — gnawing and pervasive anxiety among the affluent, underrepresentation among the middle classes and an almost total lack of access among the poor.† (Karabel) The author further maintains that the selective colleges serve less as vehicles of upward mobility than as transmitters of privilege from generation to generation, notwithstanding their image as meritocratic beacons of opportunity. Therefore, I agree with the author and support his argument that admission to these institutions causes a serious issue across the socioeconomic spectrum of the nation today. it is essential that determining steps are taken by the authorities to resolve this issue and to improve the image of these institutions as meritocratic beacons of opportunity. A reflective analysis of the article by Jerome Karabel confirms that the author makes a highly relevant discussion on the lack of opportunity for some sections of the society to get into our leading colleges and universities. As an individual who has witnessed such cases of the people in my friend circle, I totally agree with the author’s arguments.

Vaccination of children. The importance of parents need to vaccinate Research Paper

Vaccination of children. The importance of parents need to vaccinate their children - Research Paper Example Vaccination of children. The importance of parents need to vaccinate their children According to the U.S. Centers for Disease Control and Prevention (CDC), â€Å"Vaccinations not only protect children from developing a potentially serious disease but also protect the community by reducing the spread of infectious disease†. Vaccination can help children for the growth of their immunization system. Children during their developmental stages are vulnerable to many diseases. They may not possess adequate resistive power to counter the attacks of diseases during their infancy or early childhood period. Many children forced to suffer death before the introduction of the practice of vaccination of children. Diseases like diphtheria, small pox, measles, polio etc can cause immense problems to the children during their early developmental stages. After the introduction of vaccination for child diseases like polio, small pox, diphtheria, measles etc started to decrease or disappear from the world. In other words, vaccination of children saved millions of lives since its introduction. Today, in most of the countries vaccination of children against dreadful diseases starts immediately after the birth itself. Periodical vaccination against different diseases may continue till the child reaches his/her 15 or 16 year s of age. In short, vaccination of children can save millions of lives and therefore the parents should give more attention to the periodical vaccination of their children. This paper analyses the importance of child vaccination. Importance of Child Vaccination Up through the early 1920's, diphtheria was one of the most dreaded childhood diseases in the United States, killing over 10,000 people every year. We started vaccinating children against diphtheria in the 1930's and 40's, and today it is rare for a doctor even to see a case of diphtheria. In 1962, the year before measles vaccine was introduced; almost 500,000 cases of measles were reported in the U.S. In 1998 and 1999, only about 100 measles cases were reported each year. Until the middle of the 20th Century, smallpox was one of the most devastating diseases the world has ever known. In 1967, the World Health Organization declared war on smallpox with an intensive, worldwide vaccination campaign. Twelve years later, smallpox was wiped out - gone from the Earth forever. Parents in the 1950's were terrified as polio paralyzed children by the thousands. Now the fight against polio is nearly won, and soon it will join smallpox as nothing but a bad memory (Vaccinations for Children, Why and When, 2011) The above statistics clearly show the importance of vaccination of children. It should be noted that some of the serious diseases which hunted human for a long time, is under control at present, only because of the development of child vaccination system. It is necessary to vaccinate babies using a baby vaccination schedule. This vaccination schedule normally starts immediately after birth itself. Today, medical science has a vaccination schedule for babies and the strict observance of this schedule can help the babies to resist the attack of dreadful diseases. The normal vaccination schedule of a child is given below. AGE VACCINES Birth BCG, OPV, Hepatitis B 6 weeks DTP, OPV+IPV, Hepatitis B, Hib, PCV 10 wee ks DTP, OPV+IPV, Hib, PCV 14 weeks DTP, OPV+IPV, Hepatitis B, Hib, PCV 9 months Measles 1 year Varicella 15 months MMR, PCV Booster 16 months Hib Booster 18 months DTP Booster, OPV+IPV Booster 2 years

Importance of Corporate Governance for Fraud Prevention

Importance of Corporate Governance for Fraud Prevention In the era of globalisation, corporate scandals are no longer shocking news in corporate world. A recent corporate fraud has happened in Paris in Societe Generale Bank, where an employee committed a fraud of GBP 3.7 billions. It is not a new story for the corporate world as it has seen cases of BCCI (Bank of credit and commerce internationals), Polly Peck, Maxwell, Allied Irish Bank, Enron, Pamalat, Barings Bank, WorldCom, Xerox and many more. Frauds in Financial statements have become a common area of frauds now days. These frauds have increased the responsibility of auditors and also of government to pass effective laws so that scope of committing frauds can be reduced. Corporate Governance in any company is for that only. Companies are bounded by corporate governance guidelines and procedures, so that chances of fraudulent activities can be reduced. Meaning of Corporate Governance According Cadbury Report 1992, Companies are controlled and directed by the system of corporate governance. In companies, Corporate Governance is the responsibility of Boards of Directors. Auditors and directors are elected and appointed by the consent of shareholders, which give them the feeling of satisfaction that a suitable corporate governance system is working to reserve their rights and benefits. Corporate governance set the relationship between management, board, shareholders and other stakeholders. Corporate governance enables directors and auditors to manage their responsibilities towards shareholders and wide stakeholders of the company. In contrast , corporate governance increased the confidence of shareholders that they will get an reasonable return on their investments, whereas for the stakeholders it provide the assurance that company manages its impact on society and environment in a responsible manner. Corporate governance include the combination of various laws, regulations, listing rules and voluntary private sector practices that facilitate the company to draw more capital, execute efficiently, generate profit and meet other legal obligations and general societal expectations. Corporate governance is about commitment to values, about ethical business conduct and about making a distinction between personal and corporate funds in the management of a company. Corporations pool capital from a large investor base both in the domestic and in the international capital markets. In this context, investment is ultimately an act of faith in the ability of a corporations management. When an investor invests money in a corporation, he expects the board and the management to act as trustees and ensure the safety of the capital and also earn a rate of return that is higher than the cost of capital. In this regard, investors expect management to act in their best interests at all times and adopt good corporate governance practices. Need for Corporate Governance A corporation is a body of various stakeholders include customers, employees, investors, vendors, government and society. It is necessary for any corporation to present transparent and true pictures to its shareholders. Today, this has become essential for the business world because every company wants to enter into the global capital and also want to draw the attention and also keep hold on the top human capital from different areas of the world. Company want the partnership with different vendors on the big collaborations and want to be in harmony and peace with the rest of the community. A corporation will never succeed until and unless it demonstrate and also it embrace the ethical conduct. Corporate governance in business is in relation to the ethical conduct. Here, the ethic is very much concerned about the different codes of principles and the values which help the person to differentiate and choose between the right and the wrong and as a result, help to choose from the other alternatives. Additionally, the parties which are involved in the conflicting interest give rise to the ethical dilemmas. Therefore, keeping in mind the principles which are totally based on culture, context and the value of the company, the manager make their decisions. For a business which is running good, it is very much important that it always go in the good direction by keeping the stakeholders expectations in mind. Well, corporate governance is not just the law,it is much more than the law and it cant be imposed and run by the legislation alone because its different parts comes from the managements mindset and their culture. The affairs of the organisation are conducted by the corporate governance in order to provide the fairness for all of the shareholders which comes from these three- accountability, integrity and the openness. To certify standards, the legislation can and should put down a general framework which is the â€Å"form†. The integrity and the credibility for process will finally determined by the â€Å"substance†. The substance is inevitably connected to the managements ethical standards and mindset. The corporations should always need to identify that the prosperous development and the growth of the company require the full support and the cooperation from their stakeholders and this is possible only when the corporation is following the best practices of the corporate governance. Here for shareholders, management of the corporation needs to perform as the trustees and avoid the difference of benefits among various sections of stakeholders, particularly between the owner and the other stakeholders. Corporate governance becomes the key element in order to improve the firms economic efficiency. With the help of the corporate governance, the corporations keep in mind the interest of the ample series of constituencies, and also of community where they are operating. Additionally it ensure that the board is accountable for shareholders. As a result, it guarantees that the corporations as a whole are operating for the benefit and profit of society. Though by taking the advantage of asymmetry between the shareholders, huge amount of profit can be made in short run, and by balancing the interest of all shareholders itself guarantee the growth and the survival of the corporation in long run. Heavy cost can be incurred if there is failure to execute the good governance which can be the regulatory problems. Many proofs suggest that those corporations or companies which do not implement and follow the significant corporate governance measures can give the considerable risk premium in the public market at the time when it is competing for the limited capital. In recent times, the analysts of the stock market received a high appreciation from the market for showing the relationship between the returns and the governance. For this context, different reports do not only talk about the governance in common but they also recommend the explicit alter investment which is totally based on weakness or strength of the infrastructure of the corporate governance of the company. The best thing about the credibility which is given by the procedures of a good corporate governance is that it help to provide the confidence of clients (national international) in order to draw more ‘pat ient, the capital for the long term, and also help to cut down the capital cost. All this increased attention is because of arises of the financial crises in different parts of the world. Like, the financial crises in Asia brought the attention of the corporate governance subject in Asia. Recently, the scandals in the US also disturb the unsatisfied corporate landscape and peace which are unexpected in a sense. These scandals lead to a new set of initiatives in corporate governance in US and trigger a new discussion in the United Kingdom with European union and in the rest of the world. Meaning of Financial Statement Fraud Financial statements are the picture of financial position of a company which includes balance sheet, profit and loss accounts, and trading accounts. Frauds here, means deliberately and intentionally done activities for self interest and cheating the second party. Under the Statement of Auditing Standards (SAS) 1101, it is stated that â€Å"Auditors should plan and perform their audit procedures and evaluate and report the results thereof, recognizing that fraud or error may materially affect the financial statement†. Accounting to Benny K.B. Kwok 2005, Misstatements in financial statements can arise from either by error or by fraud. Error refers to an involuntary misstatement in financial data of a company which include omission of an amount or disclosure, such as A mistake in gathering or processing data from which financial statements are prepared; An incorrect accounting estimate arising from oversight or misinterpretation of facts; and A mistake in the application of accounting principles relating to measurement, recognition, classification, presentation or disclosure. The usage of both the dishonesty to get the financial advantage illegally and intentionally falsification also disturbing the statements, leads to fraud which can be done by any person from the management, or the employees or any third party. In fraud following things involves â€Å"Falsification or alteration of accounting records or other documents; Misappropriation of assets or thefts; Suppression or omission of the effects of transaction from records or documents; Recording of transaction without substance; Intentional misapplication of accounting policies; Wilful misrepresentations of transactions or of the organizations state of affairs. Financial reporting in the UK is based on three principles:- Companies Act 2006 Accounting standards or specifically Statements of Standard Accounting Practices(SSAP) and Financial Reporting Standards And the requirements of the Stock Exchange. Companies Act 2006 According to the Companies Act 2006, accounting records maintained by every company must: Be sufficient to show and explain the companys transactions; Disclose with reasonable accuracy at any time the financial position of the company at that time and Enable the directors to ensure that any Profit and Loss account or Balance Sheet gives a true and fair view of the companys financial position. Accounting records should contain day to day entries of all transactions, full record of companys assets and liabilities and full information regarding companys stock. According to Companies Act 2006 under section 145(B), if the financial statements of a company do not meet the requirements of the Act, the court may ask for revised financial statements and the cost of re- preparing financial statements would be bear by the party in abuse of preparing defective or false financial statements. Accounting Standards In UK, all accounting standards till 31 July 1990 used to be called Statements of Standards Accounting Practice (SSAP) which was formulated by the Accounting Standard Committee (ASC). SSAP was then gradually replaced by Financial Reporting Standards (FSA) produced by the successor to the ASC, the Accounting Standards Board (ASB). UK Accounting Standards laid down the guidelines regarding how particular types of transaction should be reflected in the financial statements of a company to present true and fair picture of companys financial position. The stock exchange listing requirements-Yellow Book Rules which governed the listing of securities of the stock exchange in the UK are known as the Yellow Book. According to Yellow Book, listed companies are required to publish their financial statements within six months of their financial year end. Most of the listed companies however, publish their financial statements quarterly. It is necessary from the point of view of shareholders because shares of companies are in the hands of general public and they need continuous information regarding firm financial position so that they can take right investment decision. According to SSAP December 1999, â€Å"the objective of financial statements is to provide information about an organizations financial performance and financial position that is useful to a wide range of readers for assessing the stewardship of the organizations management and for making economic decisions†. For the purposes of this discussion, we are talking about financial statement fraud in a major public company context; a context that can affect confidence in the financial system. We are not talking about what might be called internal fraud or a great many other types of dishonest conduct in corporate life. This is about projecting a false state of affairs on a large scale and in a very public context. DEFINITIONS Corporate governance is about promoting corporate fairness, transparency and accountability Wolfensohn, president of the Word bank, June 21, 1999. Corporate governance is the system by which business corporations are directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, such as, the board, managers, shareholders and other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs. By doing this, it also provides the structure through which the company objectives are set, and the means of attaining those objectives and monitoring performance, OECD April 1999. OECDs definition is consistent with the one presented by Cadbury [1992]. According to Elliot and Willingham, â€Å"financial statements fraud is management fraud, the deliberate fraud committed by management that injures investors and creditors through materially misleading financial statements†. Key words used in the research: Currency option: In this option the possessor has the right to sell or buy the currency at a particular phase of the time at a particular price. In this the possessor doesnt have the obligation. Currency forward: The prices are locked in this contract so that the counterparties can sell or buy the currency on the upcoming or future date. Here the possessor who holds the contract are obliged to sell or buy the currency at a particular future date, at the particular quantity and on a particular price. These transactions are also called as outright forward currency transactions. Option: when the option is exercised to earn profit then it is known as in- the-money option. Call option: In this type of option, the buyer who wants to buy any assets, commodities etc. has the right to buy at a particular period of time but he is not obliged, whereas the seller is highly obliged to sell the assets etc. at a particular time to the buyer. A premium has to be paid by the buyer to hold this right. This option is carried out when the strike price is below the price of the market of the agreed commodities. Put option: In this option, the seller has obligations to buy the commodities, assets etc. from the buyer whereas the buyer has the right, but there is no obligation, to sell the agreed commodities, assets etc. at a particular period of time for a particular price. This option is carried out when the strike price is more than the price of the market of the agreed commodities. Prime broker: The person who settle down the cash and security for their clients in the financial market by charging them fees is known as the prime broker. They manage the money of their clients by using different strategy in the market. Research Questions and Objectives Research Questions Financial statements frauds -ethical or technical issue? How firms manipulate their financial statements? What are the motives of financial frauds other than monetary? What is the role of corporate governance in controlling these frauds? Research Objectives: To analyse the major areas of frauds. To examine role of top management in fraudulent practices. To analyse the efficacy of various acts and rules passed for enhanced corporate governance. To analyse the importance of financial statements in investment decision making. To explore the causes and consequences of financial statements frauds. Scope of study: Research study will be restricted to European countries financial statement frauds as US market is more explored than European market. Research will examine and critically analyse the case study of Ireland based bank named Allied Irish Bank. Remaining chapter shall follow the following planned strategy: Chapter Two: Literature review: It will cover 3000 words and include journals and articles citation. Chapter Three: Research Methodology: It will cover 1500 words. This section will give idea of data collection and also briefly explain limitation attached to it. Chapter Four: Data Analysis: This section will evaluate and analyse the data and follow the discussion. Chapter Five: Conclusion and Recommendations: This section finally concludes the research and provides recommendations. CHAPTER TWO Literature Review 2.1.1. Agency problem and Corporate Governance 2.1.1.1 Separation of ownership -origin of agency problem Agency problem resulted from separation of ownership from control (Berge Means 1932; Jensen Meckling 1976) is still prevailing around the world. Findings have proved that firms having weaker corporate governance policies and structure face greater agency problems; which allow senior managers to cook their recipe of extracting more private benefits and finally firm perform worse at all levels (Core at al. 1999). Evidence for such a weak corporate governance structure and higher agency problems can be found from Asian Financial Crisis in 1997. At the time Asian Crisis 1997, firms which had good corporate governance structure provided better protection to shareholders especially to minor shareholders and performed better during the crisis (Joh 2003 and Mitton 2002). In countries like USA and European countries especially UK, agency problems are higher as evidenced from corporate scandals in USA and UK for example Maxwell Corporation (1991), Polly Peck (1991), BCCI (1991), Enron (2001) , Barings Bank (1995), Parmalat (2003) and many more. The recent scandal happened in Societe Generale Bank of Paris 2008, in this also agency problem was the main reason for the frauds committed by the employer of the Societe Generale Bank of Paris. An Agency problem is very crucial problem which had taken birth during 19th century. Agency theory is defined as a â€Å"contract under which one party (the principal) engages another party (the agent) to perform some service on their behalf† (Jensen and Meckling 1976). The problems arises when the agent do not work in the welfare of principal. More cases of frauds, where involvements of companys top management were high, coming into light and the simple reason is principal agency problem. In the case of HealthSouth, CEO Richard Scrushy had instructed senior managers to show fraudulent income of $2.5 billion in order to meet Wall Street expectation. 2.1.1.1.1 Agency Cost Agency costs are another issue which is bear by the principal for the frauds committed by the agent. The result of agency problem is reflected in companys share price which can be seen as the loss to shareholders in terms of declined in the price of shares in stock exchange.Jensen and Meckling (1976) explained agency costs as the sum of monitoring costs, bonding costs, and residual loss. Monitoring cost:- In UK companies are required to follow Cadbury (1992) and Greenbury (1995) reports for corporate governance. Monitoring cost are paid by the principal to monitor the behaviour of agents. Monitoring cost generally include costs of conducting auditing, writing executive compensation contracts and sometimes cost of firing the fraud employees and other top managers or executives. All these costs are paid by the principal, but Fama and Jensen (1983) argued that these agency costs which are initially born by the principal, ultimately borne by the agents as the compensation of agents are adjusted to cover these costs. Some researcher further argued that monitoring will restrict the managerial initiative (Burkart, Gromb and Panunzi 1997). Criticisers of Cadbury Report (1992) have argued that high level of monitoring may restrict the managerial entrepreneurship. Bonding Costs As argued by Fama and Jensen( 1983), monitoring cost ultimately bear by agents which need to set up structure that will act in interest of shareholders or principal , the cost of establishing these set up or system is known as bonding costs. These costs are not always financial in nature; it may include additional information provided to shareholders. Denis (2001) further argued that â€Å"the optimal bonding contract should aim to entice managers into making all decisions that are in the shareholders best interests†. In UK, bonding structure which is imposed on closely held companies management, require companies to distribute all income after meeting all business expenses. Earning retention is big problem in UK; the mechanism of bonding may reduce the scope of this problem. Residual Loss â€Å"Residual loss arises because the cost of fully enforcing principal-agent contracts would far outweigh the benefits derived from doing so. Since managerial actions are unobservable ex ante, to fully contract for every state of nature is impractical. The result of this is an optimal level or residual loss, which may represent a trade-off between overly constraining management and enforcing contractual mechanisms designed to reduce agency problems.† (Patrick McColgan 2001:8). 2.1.1.2 Stewardship theory Agency theory is more dominant in the perspective of corporate governance mechanism, but this view has been criticized by many writers (Hoskisson et al. 2000; Blair 1995; Perrow 1986). Agency theory had limitation in explaining sociological and psychological involved in principal agent conflicts (Davis Thompson 1994; Davis et al.1997). Stewardship theory assume mangers as good stewards of the firms. Managers act diligently in order to attain high corporate profits and shareholders returns (Donaldson Davis 1994). In an empirical study performed by Tian and Lau 2001 in Chinese shareholding firms, they find stewardship theory has received strong support in comparison to agency theory. Further Phan 2001 explained that â€Å"whether the assumptions of Agency Theory can be generalised to emerging markets, with their different sociological, economic, and developmental fundamentals, remains an important research question†. In summary, agency theory has its roots in industrial and organisational economics. Agency theory assumes that behaviour of human being is opportunistic and selfish. Therefore, the theory recommends strong director and shareholder control. It suggests the fundamental function of the board of directors is to control managerial behaviour and try to ensure that managers act in the best interests of shareholders. 2.1.2 Review of Corporate Governance reports In this section, international reports on corporate governance will be critically reviewed which were published in last decades. The international reports considered in this section are as follows: â€Å"Report of the Committee on the Financial Aspects of Corporate Governance† (Cadbury Report, 1992) â€Å"Where were the Directors? Guidelines for Improved Corporate Governance in Canada† (Dey Report, 1994) The General Motors Corporation Guidelines (GMC, 2001) â€Å"Committee on Corporate Governance† (Hampel Report, 1998) â€Å"OECD Principles of Corporate Governance† (OECD Report, 1999) Sarbanes- Oxley Act 2002 After the unexpected corporate scandals of renowned companies like Maxwell (1991), Polly Peck (1991), and BCCI (1991) among others in the UK, the committee for corporate governance under the guidance of Sir Adrian Cadbury along with Financial Reporting Council (FRC), the London Stock Exchange (LSE), and the other accountancy profession has been formed to address corporate governance issues. This report was known as Cadbury report which was first report in UK focused on the aspect of corporate governance such as financial reporting and reviewed the role of boards and auditors. This report was published in 1992. The Cadbury committee report finally draw two major recommendation for the structure of UK corporate board. Cadbury report suggests at least three non executive directors in the board and two of them should be independent from management. The positions of chairman and CEO should not hold by the same person. The purpose behind this set up was to reduce the individual dominance a nd ensuring higher level of monitoring for corporate board by introducing more independence. Beasley (1996) and Dechow et al. (1996) found that â€Å"firms with more independent boards are significantly characterised by a lower likelihood of financial statement fraud and earnings management†. In Canada, during 1994 Dey report was published. This report was the first fully fledged report on corporate governance which a company should follow in order to list on stock exchange. Toronto stock exchange (TSE) adopted these guidelines in 1995 which were laid down by the Dey report. All TSE listed companies required to provide the difference in their corporate governance guidelines and guideline laid down by the Dey report. After Dey Report 1994, other similar reports in other jurisdiction have been published. General Motors Corporation (GMC) in USA published its own corporate guidelines in 1994 after criticising by the shareholders regarding poor company performance and doubtful board practices. These guidelines were developed with consent of GMC board, its shareholders and other activists for corporate governance. These guidelines were welcomed by the institute California Public Employees Retirement System (CalPERS) and by the industry. GMC guidelines become the benchmark in USA for corporate governance. In UK, during 1998, Hampel Committee was formed to review the recommendations of Cadbury report (1992) and the Greenbury report (1995) relating to executive remuneration. The Hampel committee was also formed to cover some gaps by these two reports i.e. Cadbury report and Greenbury report. Hampel report suggests that good corporate governance goes beyond prescribed corporate structures. According to Hample Report (1998:15) on Corporate Governance Sir Hample â€Å"recommend that companies should include in their annual report and accounts a narrative statement of how they apply the relevant principles to their particular circumstances. Given that the responsibility for good corporate governance rests with the board of directors, the written description of the way in which the board has applied the principles of corporate governance represents a key part of the process†. Hampel report drew attention for the approach of box ticking which is a serious issue for corporate governance . It also examined the implementation of Cadbury and Greenbury report and suggested more clear recommendations on policies of remuneration, accountability and auditing. During 1999, Organisation for Economic and Co-operation Development (OECD) laid down principles of corporate governance for the listed companies of member countries of OECD. It cover main subjects areas like rights and equitable treatment of shareholders, role of stakeholders in corporation structure, disclosure and transparency of financial facts and figures and majorly role and responsibilities of board. OECD guidelines become starting point for local policy makers of corporate governance. After the ,shocking scandals of Enron and WorldCom, US congress along with NYSE (New York Stock Exchange) passed the reforms to address conflicts of interest and redefined relationship between companies and auditors. This reform was known as the Accounting Industry reform Act 2002 which is widely known as Sarbanes Oxley Act 2002. The main purpose of this act was to enforce the independence of external auditors. The act also reinforced duties and responsibilities for CEOs and CFOs by imposing strict penalties for misrepresenting companys quarterly and annual reports. The penalty for misrepresentation was personal fines of US$ 1 million or imprisonment up to 10 years or both. Sarbanes Oxley Act has intense effect on the corporate governance policies on US and rest of the world. NYSE also imposed additional requirement for listed companies, under which listed companies must have independent directors in majority and must disclose business code of conduct and ethics for directors, office rs including managers at all level, and employees. Whittington(1993) and Melis, (2004a) argued that â€Å"corporate financial reporting and corporate governance systems are highly correlated, with any improvement in either system having a positive influence on the other, and vice versa† Combined code issued in 2006 replaces the combined issued in 2003. Financial service authority of UK, require listing companies to be obliged by the combined code 2006 and carry out consultation before listing. This new code contains main principles and provisions. Combined code 2006 asks listed companies to make a disclosure statement for code and that should be in two parts. Some of the provisions are not or less relevant for small or new listed companies. Also some provisions do not apply to companies below FTSE 350. 2.1.3 Global findings for adoption of corporate governance guidelines According Stephanie Maier (EIRIS 2005:1) findings, â€Å"Only 25% of US companies separate the roles of chairman and CEO compared with at least 50% forcompanies in other developed economies. Swiss boards have the highestpercentage of independent directors(81%) Germany, Austria and Japanall have less than 10%. Only 4% of companies in Japan haveaudit committees comprising amajority of independent directorscompared to over 95% in the USA,Canada, the Netherlands,Luxembourg, the UK and Ireland†¢ Only 22% of companies in Singaporeand 25% of companies in Hong Konghave meaningful codes of ethics†. Board size: According to EIRIS 2005, average board size is minimum in New Zealand (7.2) and maximum in Germany (22.8). USA and UK comes at rank 7th and 8th with average board size of 10.7 and 11.4 respectively ( see appendices for details). Higgs Review (2003) suggested â€Å"An effective board should not be so large as to become unwieldy. It should be of sufficient size that the balance of skills and experience is appropriate for the requirement of the business and that changes in the boards composition can be managed without undue disruption†. Separation of ownership and CEO According to findings by EIRIS 2005, in UK nearly 97% separate the ownership under unitary board structure whereas in US only 25% companies separate the ownership under the unitary board structure. In Ireland and Luxemb Importance of Corporate Governance for Fraud Prevention Importance of Corporate Governance for Fraud Prevention In the era of globalisation, corporate scandals are no longer shocking news in corporate world. A recent corporate fraud has happened in Paris in Societe Generale Bank, where an employee committed a fraud of GBP 3.7 billions. It is not a new story for the corporate world as it has seen cases of BCCI (Bank of credit and commerce internationals), Polly Peck, Maxwell, Allied Irish Bank, Enron, Pamalat, Barings Bank, WorldCom, Xerox and many more. Frauds in Financial statements have become a common area of frauds now days. These frauds have increased the responsibility of auditors and also of government to pass effective laws so that scope of committing frauds can be reduced. Corporate Governance in any company is for that only. Companies are bounded by corporate governance guidelines and procedures, so that chances of fraudulent activities can be reduced. Meaning of Corporate Governance According Cadbury Report 1992, Companies are controlled and directed by the system of corporate governance. In companies, Corporate Governance is the responsibility of Boards of Directors. Auditors and directors are elected and appointed by the consent of shareholders, which give them the feeling of satisfaction that a suitable corporate governance system is working to reserve their rights and benefits. Corporate governance set the relationship between management, board, shareholders and other stakeholders. Corporate governance enables directors and auditors to manage their responsibilities towards shareholders and wide stakeholders of the company. In contrast , corporate governance increased the confidence of shareholders that they will get an reasonable return on their investments, whereas for the stakeholders it provide the assurance that company manages its impact on society and environment in a responsible manner. Corporate governance include the combination of various laws, regulations, listing rules and voluntary private sector practices that facilitate the company to draw more capital, execute efficiently, generate profit and meet other legal obligations and general societal expectations. Corporate governance is about commitment to values, about ethical business conduct and about making a distinction between personal and corporate funds in the management of a company. Corporations pool capital from a large investor base both in the domestic and in the international capital markets. In this context, investment is ultimately an act of faith in the ability of a corporations management. When an investor invests money in a corporation, he expects the board and the management to act as trustees and ensure the safety of the capital and also earn a rate of return that is higher than the cost of capital. In this regard, investors expect management to act in their best interests at all times and adopt good corporate governance practices. Need for Corporate Governance A corporation is a body of various stakeholders include customers, employees, investors, vendors, government and society. It is necessary for any corporation to present transparent and true pictures to its shareholders. Today, this has become essential for the business world because every company wants to enter into the global capital and also want to draw the attention and also keep hold on the top human capital from different areas of the world. Company want the partnership with different vendors on the big collaborations and want to be in harmony and peace with the rest of the community. A corporation will never succeed until and unless it demonstrate and also it embrace the ethical conduct. Corporate governance in business is in relation to the ethical conduct. Here, the ethic is very much concerned about the different codes of principles and the values which help the person to differentiate and choose between the right and the wrong and as a result, help to choose from the other alternatives. Additionally, the parties which are involved in the conflicting interest give rise to the ethical dilemmas. Therefore, keeping in mind the principles which are totally based on culture, context and the value of the company, the manager make their decisions. For a business which is running good, it is very much important that it always go in the good direction by keeping the stakeholders expectations in mind. Well, corporate governance is not just the law,it is much more than the law and it cant be imposed and run by the legislation alone because its different parts comes from the managements mindset and their culture. The affairs of the organisation are conducted by the corporate governance in order to provide the fairness for all of the shareholders which comes from these three- accountability, integrity and the openness. To certify standards, the legislation can and should put down a general framework which is the â€Å"form†. The integrity and the credibility for process will finally determined by the â€Å"substance†. The substance is inevitably connected to the managements ethical standards and mindset. The corporations should always need to identify that the prosperous development and the growth of the company require the full support and the cooperation from their stakeholders and this is possible only when the corporation is following the best practices of the corporate governance. Here for shareholders, management of the corporation needs to perform as the trustees and avoid the difference of benefits among various sections of stakeholders, particularly between the owner and the other stakeholders. Corporate governance becomes the key element in order to improve the firms economic efficiency. With the help of the corporate governance, the corporations keep in mind the interest of the ample series of constituencies, and also of community where they are operating. Additionally it ensure that the board is accountable for shareholders. As a result, it guarantees that the corporations as a whole are operating for the benefit and profit of society. Though by taking the advantage of asymmetry between the shareholders, huge amount of profit can be made in short run, and by balancing the interest of all shareholders itself guarantee the growth and the survival of the corporation in long run. Heavy cost can be incurred if there is failure to execute the good governance which can be the regulatory problems. Many proofs suggest that those corporations or companies which do not implement and follow the significant corporate governance measures can give the considerable risk premium in the public market at the time when it is competing for the limited capital. In recent times, the analysts of the stock market received a high appreciation from the market for showing the relationship between the returns and the governance. For this context, different reports do not only talk about the governance in common but they also recommend the explicit alter investment which is totally based on weakness or strength of the infrastructure of the corporate governance of the company. The best thing about the credibility which is given by the procedures of a good corporate governance is that it help to provide the confidence of clients (national international) in order to draw more ‘pat ient, the capital for the long term, and also help to cut down the capital cost. All this increased attention is because of arises of the financial crises in different parts of the world. Like, the financial crises in Asia brought the attention of the corporate governance subject in Asia. Recently, the scandals in the US also disturb the unsatisfied corporate landscape and peace which are unexpected in a sense. These scandals lead to a new set of initiatives in corporate governance in US and trigger a new discussion in the United Kingdom with European union and in the rest of the world. Meaning of Financial Statement Fraud Financial statements are the picture of financial position of a company which includes balance sheet, profit and loss accounts, and trading accounts. Frauds here, means deliberately and intentionally done activities for self interest and cheating the second party. Under the Statement of Auditing Standards (SAS) 1101, it is stated that â€Å"Auditors should plan and perform their audit procedures and evaluate and report the results thereof, recognizing that fraud or error may materially affect the financial statement†. Accounting to Benny K.B. Kwok 2005, Misstatements in financial statements can arise from either by error or by fraud. Error refers to an involuntary misstatement in financial data of a company which include omission of an amount or disclosure, such as A mistake in gathering or processing data from which financial statements are prepared; An incorrect accounting estimate arising from oversight or misinterpretation of facts; and A mistake in the application of accounting principles relating to measurement, recognition, classification, presentation or disclosure. The usage of both the dishonesty to get the financial advantage illegally and intentionally falsification also disturbing the statements, leads to fraud which can be done by any person from the management, or the employees or any third party. In fraud following things involves â€Å"Falsification or alteration of accounting records or other documents; Misappropriation of assets or thefts; Suppression or omission of the effects of transaction from records or documents; Recording of transaction without substance; Intentional misapplication of accounting policies; Wilful misrepresentations of transactions or of the organizations state of affairs. Financial reporting in the UK is based on three principles:- Companies Act 2006 Accounting standards or specifically Statements of Standard Accounting Practices(SSAP) and Financial Reporting Standards And the requirements of the Stock Exchange. Companies Act 2006 According to the Companies Act 2006, accounting records maintained by every company must: Be sufficient to show and explain the companys transactions; Disclose with reasonable accuracy at any time the financial position of the company at that time and Enable the directors to ensure that any Profit and Loss account or Balance Sheet gives a true and fair view of the companys financial position. Accounting records should contain day to day entries of all transactions, full record of companys assets and liabilities and full information regarding companys stock. According to Companies Act 2006 under section 145(B), if the financial statements of a company do not meet the requirements of the Act, the court may ask for revised financial statements and the cost of re- preparing financial statements would be bear by the party in abuse of preparing defective or false financial statements. Accounting Standards In UK, all accounting standards till 31 July 1990 used to be called Statements of Standards Accounting Practice (SSAP) which was formulated by the Accounting Standard Committee (ASC). SSAP was then gradually replaced by Financial Reporting Standards (FSA) produced by the successor to the ASC, the Accounting Standards Board (ASB). UK Accounting Standards laid down the guidelines regarding how particular types of transaction should be reflected in the financial statements of a company to present true and fair picture of companys financial position. The stock exchange listing requirements-Yellow Book Rules which governed the listing of securities of the stock exchange in the UK are known as the Yellow Book. According to Yellow Book, listed companies are required to publish their financial statements within six months of their financial year end. Most of the listed companies however, publish their financial statements quarterly. It is necessary from the point of view of shareholders because shares of companies are in the hands of general public and they need continuous information regarding firm financial position so that they can take right investment decision. According to SSAP December 1999, â€Å"the objective of financial statements is to provide information about an organizations financial performance and financial position that is useful to a wide range of readers for assessing the stewardship of the organizations management and for making economic decisions†. For the purposes of this discussion, we are talking about financial statement fraud in a major public company context; a context that can affect confidence in the financial system. We are not talking about what might be called internal fraud or a great many other types of dishonest conduct in corporate life. This is about projecting a false state of affairs on a large scale and in a very public context. DEFINITIONS Corporate governance is about promoting corporate fairness, transparency and accountability Wolfensohn, president of the Word bank, June 21, 1999. Corporate governance is the system by which business corporations are directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, such as, the board, managers, shareholders and other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs. By doing this, it also provides the structure through which the company objectives are set, and the means of attaining those objectives and monitoring performance, OECD April 1999. OECDs definition is consistent with the one presented by Cadbury [1992]. According to Elliot and Willingham, â€Å"financial statements fraud is management fraud, the deliberate fraud committed by management that injures investors and creditors through materially misleading financial statements†. Key words used in the research: Currency option: In this option the possessor has the right to sell or buy the currency at a particular phase of the time at a particular price. In this the possessor doesnt have the obligation. Currency forward: The prices are locked in this contract so that the counterparties can sell or buy the currency on the upcoming or future date. Here the possessor who holds the contract are obliged to sell or buy the currency at a particular future date, at the particular quantity and on a particular price. These transactions are also called as outright forward currency transactions. Option: when the option is exercised to earn profit then it is known as in- the-money option. Call option: In this type of option, the buyer who wants to buy any assets, commodities etc. has the right to buy at a particular period of time but he is not obliged, whereas the seller is highly obliged to sell the assets etc. at a particular time to the buyer. A premium has to be paid by the buyer to hold this right. This option is carried out when the strike price is below the price of the market of the agreed commodities. Put option: In this option, the seller has obligations to buy the commodities, assets etc. from the buyer whereas the buyer has the right, but there is no obligation, to sell the agreed commodities, assets etc. at a particular period of time for a particular price. This option is carried out when the strike price is more than the price of the market of the agreed commodities. Prime broker: The person who settle down the cash and security for their clients in the financial market by charging them fees is known as the prime broker. They manage the money of their clients by using different strategy in the market. Research Questions and Objectives Research Questions Financial statements frauds -ethical or technical issue? How firms manipulate their financial statements? What are the motives of financial frauds other than monetary? What is the role of corporate governance in controlling these frauds? Research Objectives: To analyse the major areas of frauds. To examine role of top management in fraudulent practices. To analyse the efficacy of various acts and rules passed for enhanced corporate governance. To analyse the importance of financial statements in investment decision making. To explore the causes and consequences of financial statements frauds. Scope of study: Research study will be restricted to European countries financial statement frauds as US market is more explored than European market. Research will examine and critically analyse the case study of Ireland based bank named Allied Irish Bank. Remaining chapter shall follow the following planned strategy: Chapter Two: Literature review: It will cover 3000 words and include journals and articles citation. Chapter Three: Research Methodology: It will cover 1500 words. This section will give idea of data collection and also briefly explain limitation attached to it. Chapter Four: Data Analysis: This section will evaluate and analyse the data and follow the discussion. Chapter Five: Conclusion and Recommendations: This section finally concludes the research and provides recommendations. CHAPTER TWO Literature Review 2.1.1. Agency problem and Corporate Governance 2.1.1.1 Separation of ownership -origin of agency problem Agency problem resulted from separation of ownership from control (Berge Means 1932; Jensen Meckling 1976) is still prevailing around the world. Findings have proved that firms having weaker corporate governance policies and structure face greater agency problems; which allow senior managers to cook their recipe of extracting more private benefits and finally firm perform worse at all levels (Core at al. 1999). Evidence for such a weak corporate governance structure and higher agency problems can be found from Asian Financial Crisis in 1997. At the time Asian Crisis 1997, firms which had good corporate governance structure provided better protection to shareholders especially to minor shareholders and performed better during the crisis (Joh 2003 and Mitton 2002). In countries like USA and European countries especially UK, agency problems are higher as evidenced from corporate scandals in USA and UK for example Maxwell Corporation (1991), Polly Peck (1991), BCCI (1991), Enron (2001) , Barings Bank (1995), Parmalat (2003) and many more. The recent scandal happened in Societe Generale Bank of Paris 2008, in this also agency problem was the main reason for the frauds committed by the employer of the Societe Generale Bank of Paris. An Agency problem is very crucial problem which had taken birth during 19th century. Agency theory is defined as a â€Å"contract under which one party (the principal) engages another party (the agent) to perform some service on their behalf† (Jensen and Meckling 1976). The problems arises when the agent do not work in the welfare of principal. More cases of frauds, where involvements of companys top management were high, coming into light and the simple reason is principal agency problem. In the case of HealthSouth, CEO Richard Scrushy had instructed senior managers to show fraudulent income of $2.5 billion in order to meet Wall Street expectation. 2.1.1.1.1 Agency Cost Agency costs are another issue which is bear by the principal for the frauds committed by the agent. The result of agency problem is reflected in companys share price which can be seen as the loss to shareholders in terms of declined in the price of shares in stock exchange.Jensen and Meckling (1976) explained agency costs as the sum of monitoring costs, bonding costs, and residual loss. Monitoring cost:- In UK companies are required to follow Cadbury (1992) and Greenbury (1995) reports for corporate governance. Monitoring cost are paid by the principal to monitor the behaviour of agents. Monitoring cost generally include costs of conducting auditing, writing executive compensation contracts and sometimes cost of firing the fraud employees and other top managers or executives. All these costs are paid by the principal, but Fama and Jensen (1983) argued that these agency costs which are initially born by the principal, ultimately borne by the agents as the compensation of agents are adjusted to cover these costs. Some researcher further argued that monitoring will restrict the managerial initiative (Burkart, Gromb and Panunzi 1997). Criticisers of Cadbury Report (1992) have argued that high level of monitoring may restrict the managerial entrepreneurship. Bonding Costs As argued by Fama and Jensen( 1983), monitoring cost ultimately bear by agents which need to set up structure that will act in interest of shareholders or principal , the cost of establishing these set up or system is known as bonding costs. These costs are not always financial in nature; it may include additional information provided to shareholders. Denis (2001) further argued that â€Å"the optimal bonding contract should aim to entice managers into making all decisions that are in the shareholders best interests†. In UK, bonding structure which is imposed on closely held companies management, require companies to distribute all income after meeting all business expenses. Earning retention is big problem in UK; the mechanism of bonding may reduce the scope of this problem. Residual Loss â€Å"Residual loss arises because the cost of fully enforcing principal-agent contracts would far outweigh the benefits derived from doing so. Since managerial actions are unobservable ex ante, to fully contract for every state of nature is impractical. The result of this is an optimal level or residual loss, which may represent a trade-off between overly constraining management and enforcing contractual mechanisms designed to reduce agency problems.† (Patrick McColgan 2001:8). 2.1.1.2 Stewardship theory Agency theory is more dominant in the perspective of corporate governance mechanism, but this view has been criticized by many writers (Hoskisson et al. 2000; Blair 1995; Perrow 1986). Agency theory had limitation in explaining sociological and psychological involved in principal agent conflicts (Davis Thompson 1994; Davis et al.1997). Stewardship theory assume mangers as good stewards of the firms. Managers act diligently in order to attain high corporate profits and shareholders returns (Donaldson Davis 1994). In an empirical study performed by Tian and Lau 2001 in Chinese shareholding firms, they find stewardship theory has received strong support in comparison to agency theory. Further Phan 2001 explained that â€Å"whether the assumptions of Agency Theory can be generalised to emerging markets, with their different sociological, economic, and developmental fundamentals, remains an important research question†. In summary, agency theory has its roots in industrial and organisational economics. Agency theory assumes that behaviour of human being is opportunistic and selfish. Therefore, the theory recommends strong director and shareholder control. It suggests the fundamental function of the board of directors is to control managerial behaviour and try to ensure that managers act in the best interests of shareholders. 2.1.2 Review of Corporate Governance reports In this section, international reports on corporate governance will be critically reviewed which were published in last decades. The international reports considered in this section are as follows: â€Å"Report of the Committee on the Financial Aspects of Corporate Governance† (Cadbury Report, 1992) â€Å"Where were the Directors? Guidelines for Improved Corporate Governance in Canada† (Dey Report, 1994) The General Motors Corporation Guidelines (GMC, 2001) â€Å"Committee on Corporate Governance† (Hampel Report, 1998) â€Å"OECD Principles of Corporate Governance† (OECD Report, 1999) Sarbanes- Oxley Act 2002 After the unexpected corporate scandals of renowned companies like Maxwell (1991), Polly Peck (1991), and BCCI (1991) among others in the UK, the committee for corporate governance under the guidance of Sir Adrian Cadbury along with Financial Reporting Council (FRC), the London Stock Exchange (LSE), and the other accountancy profession has been formed to address corporate governance issues. This report was known as Cadbury report which was first report in UK focused on the aspect of corporate governance such as financial reporting and reviewed the role of boards and auditors. This report was published in 1992. The Cadbury committee report finally draw two major recommendation for the structure of UK corporate board. Cadbury report suggests at least three non executive directors in the board and two of them should be independent from management. The positions of chairman and CEO should not hold by the same person. The purpose behind this set up was to reduce the individual dominance a nd ensuring higher level of monitoring for corporate board by introducing more independence. Beasley (1996) and Dechow et al. (1996) found that â€Å"firms with more independent boards are significantly characterised by a lower likelihood of financial statement fraud and earnings management†. In Canada, during 1994 Dey report was published. This report was the first fully fledged report on corporate governance which a company should follow in order to list on stock exchange. Toronto stock exchange (TSE) adopted these guidelines in 1995 which were laid down by the Dey report. All TSE listed companies required to provide the difference in their corporate governance guidelines and guideline laid down by the Dey report. After Dey Report 1994, other similar reports in other jurisdiction have been published. General Motors Corporation (GMC) in USA published its own corporate guidelines in 1994 after criticising by the shareholders regarding poor company performance and doubtful board practices. These guidelines were developed with consent of GMC board, its shareholders and other activists for corporate governance. These guidelines were welcomed by the institute California Public Employees Retirement System (CalPERS) and by the industry. GMC guidelines become the benchmark in USA for corporate governance. In UK, during 1998, Hampel Committee was formed to review the recommendations of Cadbury report (1992) and the Greenbury report (1995) relating to executive remuneration. The Hampel committee was also formed to cover some gaps by these two reports i.e. Cadbury report and Greenbury report. Hampel report suggests that good corporate governance goes beyond prescribed corporate structures. According to Hample Report (1998:15) on Corporate Governance Sir Hample â€Å"recommend that companies should include in their annual report and accounts a narrative statement of how they apply the relevant principles to their particular circumstances. Given that the responsibility for good corporate governance rests with the board of directors, the written description of the way in which the board has applied the principles of corporate governance represents a key part of the process†. Hampel report drew attention for the approach of box ticking which is a serious issue for corporate governance . It also examined the implementation of Cadbury and Greenbury report and suggested more clear recommendations on policies of remuneration, accountability and auditing. During 1999, Organisation for Economic and Co-operation Development (OECD) laid down principles of corporate governance for the listed companies of member countries of OECD. It cover main subjects areas like rights and equitable treatment of shareholders, role of stakeholders in corporation structure, disclosure and transparency of financial facts and figures and majorly role and responsibilities of board. OECD guidelines become starting point for local policy makers of corporate governance. After the ,shocking scandals of Enron and WorldCom, US congress along with NYSE (New York Stock Exchange) passed the reforms to address conflicts of interest and redefined relationship between companies and auditors. This reform was known as the Accounting Industry reform Act 2002 which is widely known as Sarbanes Oxley Act 2002. The main purpose of this act was to enforce the independence of external auditors. The act also reinforced duties and responsibilities for CEOs and CFOs by imposing strict penalties for misrepresenting companys quarterly and annual reports. The penalty for misrepresentation was personal fines of US$ 1 million or imprisonment up to 10 years or both. Sarbanes Oxley Act has intense effect on the corporate governance policies on US and rest of the world. NYSE also imposed additional requirement for listed companies, under which listed companies must have independent directors in majority and must disclose business code of conduct and ethics for directors, office rs including managers at all level, and employees. Whittington(1993) and Melis, (2004a) argued that â€Å"corporate financial reporting and corporate governance systems are highly correlated, with any improvement in either system having a positive influence on the other, and vice versa† Combined code issued in 2006 replaces the combined issued in 2003. Financial service authority of UK, require listing companies to be obliged by the combined code 2006 and carry out consultation before listing. This new code contains main principles and provisions. Combined code 2006 asks listed companies to make a disclosure statement for code and that should be in two parts. Some of the provisions are not or less relevant for small or new listed companies. Also some provisions do not apply to companies below FTSE 350. 2.1.3 Global findings for adoption of corporate governance guidelines According Stephanie Maier (EIRIS 2005:1) findings, â€Å"Only 25% of US companies separate the roles of chairman and CEO compared with at least 50% forcompanies in other developed economies. Swiss boards have the highestpercentage of independent directors(81%) Germany, Austria and Japanall have less than 10%. Only 4% of companies in Japan haveaudit committees comprising amajority of independent directorscompared to over 95% in the USA,Canada, the Netherlands,Luxembourg, the UK and Ireland†¢ Only 22% of companies in Singaporeand 25% of companies in Hong Konghave meaningful codes of ethics†. Board size: According to EIRIS 2005, average board size is minimum in New Zealand (7.2) and maximum in Germany (22.8). USA and UK comes at rank 7th and 8th with average board size of 10.7 and 11.4 respectively ( see appendices for details). Higgs Review (2003) suggested â€Å"An effective board should not be so large as to become unwieldy. It should be of sufficient size that the balance of skills and experience is appropriate for the requirement of the business and that changes in the boards composition can be managed without undue disruption†. Separation of ownership and CEO According to findings by EIRIS 2005, in UK nearly 97% separate the ownership under unitary board structure whereas in US only 25% companies separate the ownership under the unitary board structure. In Ireland and Luxemb

Shifting Efficiency Essay -- essays research papers

Shifting Efficiency One of the most important and life-altering inventions in history is the creation of the automobile. The first model was built with a manual transmission, meaning the operator of the vehicle was responsible for manually changing gears to increase speed. This method of acceleration, while efficient, required the complete attention of the operator, and it sometimes took away the enjoyment of driving. This led to the invention of the automatic transmission, a method by which the operator of the vehicle no longer had to switch gears, as this was done automatically. Since the development of the automatic transmission, there has always been conflict about which method of acceleration is more efficient. Driving a vehicle with an automatic transmission allows for multitasking such as talking on a cell phone or eating a meal while driving. This, however, is not always a safe way to drive, especially in traffic when frequent stopping and going is necessary. This method of driving, though dangerous to many if it is not undertaken carefully, seems to be popular to most people who enjoy the freedom of multitasking. Driving a vehicle with a manual transmission makes it almost impossible for the operator to talk on a cell phone or do other tasks because the use of both hands is required to direct the vehicle and shift gears at the same time. To some people, this is a much safer method of driving, because it requires the driver to focus more, which reduces the risk of a...

The Shallows Essay

He notices himself jump around a lot more than before and feels that it is becoming more and more apparent to the people he discusses his issues with. The main thing noticed that the author speaks of is although that we become more distracted and lose more of our deep thoughts as technologies change, but overall we are gaining more information since the internet is changing the way we think. It used to be before that there were libraries where you went to go study and read, but now the books online and Google have transcended to be able to find information faster, therefore seeing and learning more.Carr provides much info on different studies and experiments on how the human brain works regarding plasticity and how the human brain winks. The author points out that before the world wide web that the art of book writing was mulch more powerful, and it seems from his point five;u that he enjoyed the books more when people were actually writing by hand as opposed to typing books on compu ters now. From my perception he points out that older generations before new technological advances were prone to know more about one specific issue/item and were able to use deep reading to be empowered.Nowadays, the technology has kept our minds â€Å"distracted† and moving faster to see information more quickly as opposed to re-internet days since the information is readily available. He does a good providing the IQ test example where he states that we aren't smarter than our parents, but we're smart in different ways due to these technological advances, and the resources available compared to earlier generations. Analysis of The Shallows This book opened up my mind quite a bit and made me sit back and realize how Carts points are actually what I feel the majority of the time.I see every day how technology has changed the world and also how the way we think. It is obvious to see in the workplace and just in life that the newer generations finitely have more technological k nowledge than earlier generations. For example, a couple months ago my mother bought her first phone and she wanted me to show her how to operate and use the phone. I was far ahead Of her in the technology sense Of things, and it seems apparent that earlier generations try to avoid dealing with the new technological advances.It surprises me how many earlier generations stick with their â€Å"old school† phones just because they don't want to bother having to learn all that the phone does, and mostly because they despise of it as well. What was once a Barry full of books in primary/secondary schools has now transcended to everything being electronic due to the ever-changing technology and cost savings of not having to buy the books and storing them in the library, as well as hiring librarians to operate the facility.Also, the way we use to study and write papers has completely transcended to online capabilities in order to get whatever we need accomplished. I can't remember th e last time I have been to a library to gather information from credible sources such as encyclopedias, newspapers, articles, etc. It is essentially non-existent now u to the power of the internet. Personally, I agree with Carr and how the internet/technology has created basically a â€Å"scattered† brain and has completely changed the way we think. Member when was elementary/ middle school/high school and we did everything on the chalk board, wrote everything on notebook paper, and read hardback books. I felt like everything was a little bit easier to absorb and I think it was due to there being no distractions of technology. Not only was more focused in the material that I was learning but I felt the â€Å"deep thought† senses that Carr describes in the book. Even now in grad school, we are leaning away from the classic hardback books, and moving towards e-books on the Kindle that Carr talks about as well in the book.We have received one hardback book so far out of t he many classes we've taken thus far, and that could be due to the fact that it was accounting, but the rest have been via kindle. Of course see this transition more of a cost savings more than anything, but the ability to do this is due technological advances. I feel like it is easier and I feel more focused learning on a hardback book as opposed to looking at a screen. Even maneuvering around on kindle makes it a hassle and not as easy to find the info you are looking for is a huge reason why prefer the hardback book.It is much easier to physically flip through pages to get to the page you want. Also, highlighting, taking notes, putting sticky notes in the hardback book makes it much easier to study and remember where all your important info is for that specific book/class. What is funny is even as type this paper I feel the need to take more breaks, and the comical part is I picked up my phone to check my email as soon as I took a break. Personally, I think a huge part of castrat ions has to do with just people being so busy because of technology and the ability to check your phones, computers, etc. ND know you have a schedule filled. In earlier generations before technology' it took quite a while to relay information so the day to day life was much simpler per say. One chapter that stuck out to me was the Google chapter. Carr argues that Google is a huge distraction and basically in the business of distraction, and agree 100% with him. Even though the first thing people say when they are looking for something is â€Å"Google it†, Google definitely uses many distractions such as pop ups and advertisements to sway people to become distracted from their original destination.Major game changers regarding the internet are Twitter and Backbone. These social media platforms have completely changed the way people think, more so Twitter in my opinion. Find myself throughout the day checking Twitter every hour or so just to keep in the loop with all the news g oing on in the World, financial advice, sports, etc. I use this platform as opposed to sitting down and reading through a newspaper. Not only does it take more time to sit down and read a newspaper, it doesn't roved as much information that Twitter can.I have absolutely everything I need on my Twitter as far as the people/businesses that I follow and always seem to have the information faster than most people. Twitter has changed the world in how fast information is revealed, but again is a distraction as well. The ease of bringing up Twitter on any electronic device distracts you from your main goal at any given time. Backbone is a different type of social media that provides more of a social platform as far as knowing what other friends are doing at any given time. Ink this is more of a distraction than anything, but they are starting to move towards providing news updates as well. The way portray Backbone is if I see someone online at work then it is more of a playing around on t he internet talking/seeing what friends are up to. When I see Twitter, me personally, I feel it is more news based to gather info that you are interested in. Realizing the way we think currently and how we have changed due to technological advances will make me more aware Of situations in the workplace. Notice this daily just because of the fact that we conduct equines strictly via computer and internet now.It used to be that a trade floor would deal with trades manually and over the phone as well. Now traders use instant messaging and online trading platforms to conduct business, which makes it more efficient but at the same time is completely different than earlier business. Instant messaging allows me to be more productive when dealing with counterparts because you can be dealing with multiple customers at one time, rather than picking up the phone and talking to each one. At the same time instant messaging is a distraction in the sense f customers knowing that you are online and are able to IM you at any time.Many times I get Aim's when I am in the middle of completing daily work that needs to be done so have to stop what I'm doing to answer customer's questions since customer service is our top priority. Another place you see distraction a lot is in meetings and people with their cell phones. Probably the worst thing you can see in a meeting is people just scrolling on their phone while an important meeting is taking place. This is an area where technological advances hurt employees thinking and focus while in a meeting Hereford it has led me to keep my cell phone on silent and in my pocket during any meeting.