CORPORATE GOVERNANCE

Corporate Governance



Corporate Governance

Introduction

After a series of unpleasant corporate abuses during the new millennium, the U.S. Congress approved the Sarbanes-Oxley, to build corporate governance further meticulous, more transparent monetary applications and legally attributable to the executives responsible for crimes. The initial year of execution was difficult and expensive, much more than what the companies originally expected. However, in view of some firms more flexible, the following years turned out to be not only less difficult and expensive (as often happens when do something for the second time), but was a basis of important insights into operations, which executives have become greater effectiveness and cost savings. The areas of improvement go well beyond technical conformity with the law (Bhojraj, 2003, p455).

They include a strengthened control environment, documenting more reliable, more involvement of audit committees, less charges related to compliance with other statutory schemes, standardized IT processes and other tasks, condensed complication of organizational procedures, improved inner controls within partner companies, and more efficient exercise of manual and automated. The result is not only the safety of shareholders interest, but also the official purpose of the law, but also a greater value for them.

Sarbanes-Oxley (SOX) was enacted in the United States in 2002 after a series of major financial scandals involving companies like Enron, WorldCom and Tyco. The objective of SOX was to restore investor confidence in markets and prevent further cases of fraud by companies. Canadian regulatory agencies have had no choice but to adopt similar reforms, since 15% of Canadian companies whose shares were traded on the Toronto Stock Exchange were also listed on the American Stock Exchange.

However, Canadian regulatory agencies have adopted a less coercive approach and better adapted to the Canadian context. It is also important to note that both the U.S. and Canada, this regulatory reform is an evolving process. In Canada, the Canadian Securities Administrators (CSA), following extensive consultations with the securities commissions of the provinces and territories, and with many stakeholders, have introduced a variety of instruments and policies national called Multilateral instruments (MI) in order to take into consideration the most important provisions of SOX (Brickley, 2007, p189).

Sarbanes & Oxley Act is to establish guidelines regarding the consolidation of large companies traded on the American market, with the intention of regaining investor confidence. This legislative change has occurred after a crisis of values; a result of a unique mentality, the capitalist is convinced that the ability to create value was not through the generation of profits but rather investment in connectivity. The financial crisis following the bursting of the tech bubble in particular saw the emergence of several major financial scandals such as Enron and WorldCom in the United States and, more recently, Parmalat in Europe. To prevent such problems from occurring in the future, but also to restore investor confidence, the governments of several countries have enacted so-called financial security. In United States, the Sarbanes-Oxley was passed by Congress and ratified by President Bush in July 2002 (Carter, 2003, ...