CORPORATE GOVERNANCE

Corporate Governance

Corporate Governance

Introduction

Corporate governance is the set of rules for shareholders to ensure that companies, which they hold shares of, are directed in accordance with their own interests. This concept is increasingly being formalized through enterprise agreements across the globe. The great crisis and bankruptcy that began to emerge in the different systems and corporations in the recent past has aroused the need to transform the practices of corporate business, thus creating a government that comes to the corporate world to try to normalize the functioning of markets, especially the markets for capital.

This is since this market is where are the biggest frauds of the economy, for lack of information transparent financial, reliable and high quality. "Corporate governance" simply means “business management", the term is usually normatively used in the sense defined here. There are a number of rules (guidelines, principles, codes) that define good corporate governance, with the target directions differ. On one hand, it comes to responsible corporate governance in the interests of owners and shareholders as well as the public. Another perspective concerns the stakeholders and other stakeholders (especially employees, including the evidence that long-term success is attainable only with the involvement of these interests, whether the most comprehensive perspective also calls for social, cultural and social responsibility.

Enron was one of the largest energy companies, in 2001 Enron was ranked number seven by fortune magazine, and Enron had the market capitalization of around five hundred largest corporations in United States. Enron had witnessed swift and sudden collapse in their market value, due to this value change of the energy giant there have been many consequences, which impacted all stakeholders of Enron including their creditor's employees and auditors. The Enron failure had a significant impact on Economy of country, which impacted the many investors and businesses. In my essay I will examine the social and economic impact of Enron, and highlight the key issues which became the reasons for corporate governance failure of Enron. In this essay I have analyzed Enron corporate governance culture as it was the leading factor for bringing down the corporation.

Before the Enron failure or collapse many institutions and individuals in United States, including US congress representatives were favoring the deregulation of businesses. Whereas, the losses of Enron failure, provided momentum to debate of regulation vs. deregulation, It has become obvious that failure of Enron has resulted in some serious consequences, which have impacted political, social and economical context of country.

Prior to the stock market crash of 1929, and great economic depression, the support from government was very little for regulating the securities markets. Many institutions and individuals had a significant financial loss due to the stock market crash, this brought up an economic turmoil resulting in the declining confidence level of people in security market. In order to regain the confidence level and faith of people in capital markets, congress took some initiatives, which includes the Securities Act of 1933 and securities exchange act ...