Introduction
Corporate governance is often regarded as one of the most progressive and effective types of project governing. Nevertheless, there is a strong necessity to mention that the principles of corporate governance presuppose strict observation of the corporate governance rules and thorough observation of the checklist points. As for the checklist, it should be emphasized that similarly to the plan, and implementation strategy, the checklist is required not only for the proper arrangement of the governance strategy but also for the maintenance of its workability. Thus, the paper aims to develop the checklist for a corporate governance strategy and explain the key principles and purposes of the particular elements of the checklist on the example of the case studies. The checklist of the project will be focused on the key aspects of corporate governance, such as the economic and managerial sides. Additionally, social and ethical aspects will be discussed as preferable and important components of the entire system. Finally, the checklist will entail all the necessary steps, which are required for the creation of a full-fledged corporate governance project.
Issues of Corporate Project Governance
The investigation of the corporate governance issues is often closely associated with the particularities of the thorough study of project origin. Depending on the aims and requirements of the governed project, the requirements to the checklist of the corporate governance will vary. The fact is that the governance practices have essentially evolved in the circumstances of the developing marketing relations, and the new tendencies of the governance have appeared. (Sama and Shoaf, 2005) It should be emphasized that these principles are based on the issues of developing globalization, penetration of the new participants into the market, and implementation of the new marketing principles. Nevertheless, despite the unified modification process, the differences are required and inevitable, as various world regions are featured with various economic principles and circumstances. Thus, by Serap and Zeynep (2008, p. 205) there is a strong necessity to emphasize the following statement:
Despite these differences, there is widespread agreement on the fundamental governance principles of responsibility, transparency, and accountability as the cornerstones of a sound economic system that can attract funding from outside investors. Depending on their legal, political and economic status, some countries have chosen to apply various legal measurements together with voluntary principles, whilst others have preferred to adopt only voluntary codes. The main motive behind the introduction of corporate governance codes is the desire to increase investor confidence in the stock market as a whole.
In the light of this statement, it should be stated that the real value of the corporate governance implementation is the improvement of the entire business performance, by improving the governance structure. Thus, all the aspects of business activity become controlled on a higher level, and the performance of these aspects improve.
As for the key issues of corporate governance, which are generally represented in the case studies, they depend on the real necessity to improve the performance and the managerial strategies, which are required for any multi level project. As Stapledon (2004, p. 45) emphasized:
Key elements of good corporate governance principles include honesty, trust and integrity, openness, performance orientation, responsibility and accountability, mutual respect, and commitment to the organization.
Thus, the checklist for any corporate governance project starts from the definition of the timeline, and the actual deadline, when the program should be accomplished. Then, when the terms are defined, the key outline of the governance project should be stated. The financial strategy of the project entails the following factors:
- Budget
- Financial consultant
- Contractor requirements (Stapledon, 2004)
Only if these three aspects of the financial side of the project are fulfilled, the further defining of the checklist may be performed. Budget generally stands for the expenses and possible incomes of the project, nevertheless, it should be emphasized that the real necessity of the budget is the control of the financial flows and the financial strategy, implemented within the project. These issues are closely linked with reporting, and, in accordance with Amiram (2008, p. 67), there is strong necessity to describe the matters of reporting:
Financial reporting is a crucial element necessary for the corporate governance system to function effectively. Accountants and auditors are the primary providers of information to capital market participants. The directors of the company should be entitled to expect that management prepare the financial information in compliance with statutory and ethical obligations, and rely on auditors’ competence.
Financial consultant of the project should be duly authorized to consult the workers and managers of the project for performing the financial operations and the calculations of the awards and expenses. The main aim of this requirement is to arrange the necessities and requirements for the financial flow control. In the light of this statement, it should be emphasized that the real necessity of financial consultation is covered in the requirements of the financial regulation of the corporate governance. (Carlsson, 2001)
Contractor requirements entail the points, concerning the values of the financial flow, and the requirements of the regulation, associated with legislative regulation of the financial aspects of the project corporate governance. On the other hand, the necessities to arrange the agreements with the participants of the project are required. In Accordance with Paredes (2004, p. 194) the following statement should be emphasized:
All these attempts indicate that a sound corporate governance practice requires an effective exercise of share ownership. From this perspective, the more specific conditions to prevent material conflict of interests by auditors, ensure stricter disclosure standards and greater fiduciary responsibility of boards to the company, as well as the establishment of a remuneration policy for key executive managers and board members. Thus, the fuller annotations on disclosure of related party transactions, greater provision for the protection of minority shareholders and greater possibilities for shareholders to question boards and to participate.
The following aspect of the corporate governance is the management of the project. Considering the factors, which influence the key processes of the corporate governance, it should be emphasized that the variety of the managerial aspects depends on the requirements and main aims of the project. The project of corporate governance generally requires the consistent and coordinated governance of the project. (Serap and Serap, 2008)
The checklist of the managerial aspect entails the following points:
- Project structure
- Appointment of the chairman
- Approving of the delegation system
- Managerial consultant approving
The detailed explanation of the listed aspects of the managerial side of corporate governance would relate the matters of the aims and requirements of the project. The project structure is regarded as the most important aspects, which defines the implementation of the other aspects. As Sama and Shoaf (2005, p. 180) emphasized:
The governance framework, including government roles, policies, regulations, and so on, is documented to have vital importance to the planning and management of projects. Several developed countries have started a development process to strengthen the ability to manage and control major public investment projects.
The project structure is documented, and the further aspects are defined. If the structure is based on the marketing principles, the structure will be related to the financial environment, within which it will be implemented. If the main requirement of the corporate government project is to perform the managerial structure, the key requirement will be the coordinated structure and delegation of the assignments.
Approving of the chairperson is required for defining the person, authorized to regulate the structure, and evaluate the effectiveness of the project performance. Originally, the key set of assignments for the chairmen entail regulation, delegation, control of the financial flow and managerial issues. (Paredes, 2004)
The delegation system is defined by the matters of the structure, and, if the structure is managerial, the main aims of the delegation system will be the definition of the deputies and the controllers of the sub-assignments. If the structure is financial, the deputy system will be more oriented at the solution of the economic issues, and the control of the financial flows.
The approving of the managerial consultant is similar to the approving of the financial consultant. Managerial consultant is required for defining the key aims and requirements of the entire corporate governance structure, and in accordance with Paredes (2004, p. 1055), there is strong necessity to emphasize the following statement:
Corporate social responsibility (CSR) has increasingly focused on corporate governance as a vehicle for incorporating social and environmental concerns into the business decision-making process, benefiting not only financial investors but also employees, consumers, and communities.
In the light of this statement, the corporate responsibility of the social aspect of the corporate governance project is defined by the realities of the marketing and financial environment of the sphere, where the project is implemented. Nevertheless, it should be emphasized that the corporate governance principles often depend on the ambiguous and powerful actions by the leading management team, which aims to implement all the possible aspects of the corporate governance and the various standards of the corporate performance. Originally, the corporate governance is regarded to be wider than it is accepted to consider, as it is impossible to implement various aspects of this strategy. Beyond the legislative issues and the basic principles of financial management, the corporate governance depends on the quality of the arranged structure and delegation system, described earlier. Moreover, the quantity, quality and frequency of the performed operations, as well as the processes of managerial disclosure define the extent, to which the to-management team exercise their responsibilities. In the light of this consideration, there is strong necessity to emphasize that the commitment of the chairman and the top-management team should be constantly evolving, as this is the key requirement for the social aspect of the corporate governance. The Financial coordinators should consider the matters of the creative accounting, as traditional accounting principles are often not efficient. Nevertheless, accountants should observe the rules of privacy, which is crucial for corporate governance, and care of nondisclosure of the financial information.
Checklist Development
The entire principle of creating the checklist depends on the set of the corporate rules, accepted in the managerial teams. Nevertheless, the managerial teams may entail managers from various organizations, consequently, the issues of strict coordination and honest cooperation. As Sama and Shoaf (2005, p. 179) emphasized:
Corporate governance has traditionally specified the rules of business decision making that apply to the internal mechanisms of companies. This set of norms and laws has, first and foremost, serves to shape the relations among boards of directors, shareholders, and managers as well as to resolve agency conflicts.
Consequently, the necessity to provide the strict and honest cooperation system is beyond any doubts. Thus, if trust is arranged, and the management teams are able to coordinate their actions, and provide the coordinated effort for the further arrangement of the corporate government project, the view of the corporate processes may be focused on the creation of the corporate mechanisms of government, which will be based on the investors’ accountability and engagement. Moreover, these mechanisms will entail the key principles of the corporate social regulation. As for the business ethics, required for this implementation, it should be incorporated into the corporate codes of behavior and corporate culture principles. It is preferable, for achieving the top of the ethic principles – non-financial reporting practices. (Amiram, 2008) This would help to arrange the dialogue and discussion channels with the stakeholders, thus, making the corporate governance essentially beneficial in comparison with the other systems. In general, considering the aspects of ethics, the following statement should be emphasized that “The impact of these corporate abuses on global and local community stakeholders bas been so overwhelming that legislators across the globe have been impelled to step in to attempt to avert the crisis by examining and redirecting corporate governance” (Stapledon, 2004, p. 419). From this perspective, there is strong necessity to emphasize that the real values of the ethic considerations within the corporate governance project are not limited to ethics itself, as it directly impacts the reputation of the project within the operating environment, and defines the attitude of the stakeholders, which will further decide the destiny of the entire project.
The origin of the checklist depends on the aims and principles of the corporate governance project. Some of the key points have been already defined. These are:
- Budget
- Financial consultant
- Contractor requirements
- Project structure
- Appointment of the chairman
- Approving of the delegation system
- Managerial consultant approving
These are the key aspects of the checklist that should be included independently on the issues and aims of the project. Nevertheless, the other projects often reveal the other points of the checklist. Along with the stated points, the important parts of the corporate government entail the following:
- Project Procedures Manuals Approving
- Program Agreement
- Expenses approving
- Service Plan
- Background Study
- Acceptance Phase
The final variant of the checklist should be provided to stakeholders and the managerial team for assessment and implementation into the project. Nevertheless, considering the aspects of project governance, the following points should be added:
- Structuring of the delegation system
- Clear definition of the responsibility structure
- Proper strategy implementation
Conclusion
Finally, it should be emphasized that the final variant of the checklist will depend on the values and requirements of the project, nevertheless, the key aspects will entail the economic, managerial and social aspects. Additionally, the managerial teams should focus on the ethic considerations of the project, as these would define the attitude of those, who regulate the evolution of the project, and will define the further financing of corporate government development.
Reference
Amiram G. 2008. Corporate Governance as Social Responsibility: A Research Agenda. Berkeley Journal of International Law. Vol, 26, no. 2
Carlsson, R. H. 2001. Ownership and Value Creation: Strategic Corporate Governance in the New Economy. New York: John Wiley & Sons.
Paredes, T. A. 2004. A Systems Approach to Corporate Governance Reform: Why Importing U.S. Corporate Law Isn’t the Answer. William and Mary Law Review, Vol 45, No. 3, 1055
Sama, L., Shoaf, V. 2005. Reconciling Rules and Principles: An Ethics-Based Approach to Corporate Governance. Journal of Business Ethics. Vol 58, 177-185
Serap A., Zeynep, O. 2008. Implementation of good corporate governance in Turkey: The case of Dogan Yayın Holding. Human Systems Management Vol. 27. pp. 201–216
Stapledon, G. P. 2004. Institutional Shareholders and Corporate Governance. Oxford: Clarendon Press.