Choose a newspaper or magazine article (not a case study) that is corporate governance related and published in the last 2 months and complete the following: Outline and summarize the arguments made in the article. Discuss the corporate governance issues
Corporate governance issues
Corporate Governance Issues
Directing and controlling corporates within any country require collective responsibilities from the citizens and the government (Harford, Mansi, and Maxwell, 2012). The stakeholders in the corporates are therefore mandated to work hand in hand with each other to ensure that the institutions are operating efficiently and effectively in the market. Corporates and companies have the mandate to show the highest level of action in undertaking corporate social responsibilities to win the trust from the public and the government as a whole. The paper analyses the issue of Swachh Bharat as the role of the companies, corporates and the citizens as indicated in the Newspaper Take up cleanliness drive for Swachh Bharat: Government tells companies (Timesofindia-economictimes, 2016).
Brief about Swachh Bharat
The Swachh Bharat is a movement that was taken by the government and initiated through corporate companies to ensure cleanup of the entire country (Raj and Kajla, 2015). The movement is a national campaign by the Indian government and was launched on 2nd October 2014 to ensure the cleanliness of the country. The idea has greatly been welcomed by the entire world and has received the funding from the World Bank to facilitate its development and success (Raj and Kajla, 2015). The Newspaper, take up the cleaning drive is written as a reminder to the corporates and the entire residents and companies about the cleaning (Timesofindia-economictimes, 2016). Drawing its principles from the past Universal Sanitation programs within the city, the Indian government even signed loans from World Bank to facilitate the entire process and also ensured that it collaborated and formed a collection of ambassadors for its entire course (Raj and Kajla, 2015). The process has been improved to offer updates on the Swachh Bharat and does not have to involve the normal supervision to conduct as it only calls for reminders to the citizens. The involvement of different stakeholders in running and supervising the entire process has ensured that there is no problem with funding as well as training of the citizens.
In the newspaper take up the cleaning drives, the author has brought out issues that are of his concern regarding the campaign. Some of the concerns addressed include; first, there is a plea for the companies to take control and practice the tradition for the entire Swachh campaign (Timesofindia-economictimes, 2016). Secondly, the author wanted to inform the public on the different sponsors for the cleaning process as well as those who have joined hands in the activity such as the National Foundation for Corporate Governance (NFCG). Thirdly, the author wanted to inform the citizens of the changes that have taken place in the running of the process like the different ways of taking the pledge on making the country clean as well as the companies’ corporate social responsibilities towards the process. Lastly, he wanted to offer a challenge to those companies who are still not working as per the new Law requirement for the support of the activity by giving examples and situations of failure among the companies. The arguments were valid and not offensive to any company and provided the direction with the main intention to plead to the public to take the course of making India clean through the initiative of the Swachh Bharat (Timesofindia-economictimes, 2016).
Corporate Governance issues raised
Some of the corporate issues that have come out within the paper include; first, transparency and disclosure. In the corporate institution, there is a need for transparency and disclosure as it is the element that ensures that funding is provided for the course of the responsibility that is to be taken (Armstrong, Guay, Mehran and Weber, 2015). The element requires that timely accountability and provision of the resource allocation for the course is available to motivate the providers on the proper usage of the resources. In ensuring the effective implementation of the element, different policies are put in place to control the entire process which when not adhered to results to the breakdown of the transparency. Disclosure of the fund’s usage provides the investors and sponsors with the necessary information to take a risk in providing support for the course at hand. The Swachh Bharat plea has provided the required transparency towards the corporate governance as it gives details on the companies spending on the Corporate Social Responsibility (CSR) activities as well as giving names of the individual companies. It also provides the three apexes which include the chartered accountants, cost accountants, and the company’s secretaries whose main role are to ensure there are timely disclosure and transparency in the provision of the accounting records. The tool has greatly helped the process as different sponsors are motivated with their timely accountability details as well as the collective involvement of the stakeholders (Armstrong, Guay, Mehran and Weber, 2015).
Secondly is the smooth implementation of the new process in running of the corporate society and activities. Waldman and Balven (2014), bringing new ideas into the system that has already been established comes with several challenges. Poor implementation and introduction of the system may result in the failure of the already existing company or organization (Waldman, and Balven, 2014). It is an issue that requires careful evaluation of its effects monitored keenly to ensure a smooth introduction. The pledge that is introduced in the Swachh Bharat for the citizens is presented smoothly as citizens are being informed on the online pledge taking which requires a prior evaluation of oneself. The companies are also being informed of the conditions and situation of the new Law with an appealing tone which ensures that none of the companies will resist adhering to the changes.
The third issue that is discussed is the community involvement in running the actions of the corporates and the government (Jizi, Salama, Dixon and Stratling, 2014). The community forms the largest percentage which is responsible for the shaping of the State or country. When the community takes responsibility for any action within the country, the smooth operation will be ensured, as they will fight by ensuring that each member of the community does the correct thing. In Swachh practice, the community is indicated as the ones being given the plea to make the environment clean. The community in that context is the companies and the potential sponsors who are to provide the funds for the action. Also, the process will only be complete if the community comes out to clean environment and construct the collection points.
Fourthly, is valuing of the shareholders’ actions and activities. The process ensures that shareholders feel recognized in the running and operation being carried out and it motivates them for the next actions (Smith, 2015). Different stakeholders have been acknowledged and valued for their support for the Swachh activity ensuring constant support from them. They have been acknowledged through naming them and indicating the support they have given to the Bharat process.
Lastly is the issue of the corporate social responsibility which has remained important in the running of the corporates (Crane, Matten, and Spence, 2013). The CSR has the mandate to ensure that there is the distribution of duties among the entire stakeholders in an organization to ensure efficient control and management. CRS also ensures that the stakeholders’ rights are greatly protected and practiced to ensure equitability in the treatment of the stakeholders a practice that gives a morale boost to the stakeholders. The responsibility provided to the companies as the CSR gives the mandate to the organizations to offer more actions than whatever the law provides for them. The CSR has been indicated as different companies have offered more resources beyond what the law has required from them in the running of the Swachh process. The Bharat has also protected its stakeholders’ rights which are indicated by the fact that the community is not forced but requested to take part in the cleaning. The provision of some companies output concerning the cleaning shows the powers given to the stakeholders, and the voluntary community engagement shows the proper management of the entire process (Crane, Matten, and Spence, 2013).
Reasons for using Newspaper to raise the Issues
The corporate issues that have been discussed were made on the Newspaper to achieve several reasons such as; first, to reach many people at the same time. A media source is known to have several users at the same time hence making the plea through it meant many people would easily reach the information. Secondly, the information was urgent, and it was required to reach many people within the shortest time possible which could greatly be achieved through the media. Thirdly, with the main aim of a corporate organization being to remain transparent in all its operation, the use of the media ensured that the information is regarded transparent by the stakeholders. Fourthly, the media source used enabled the corporate to follow up the information easily to ensure that no allegations are made which are negative contrary to whatever was written down. Fifthly, the arguments are being made on the media to act as a lesson to the other corporate companies to copy the modes of communication and show transparency in conducting the activities of their organization. Lastly, the arguments are being made to attract any other sponsor to support the course taken by the Indian government I making the country clean as it recognizes the work of other sponsors as well as showing transparency in their operations (Dyck, Volchkova, and Zingales, 2008).
Opinion concerning the raised issues
The issues raised are genuine, and they affect all the corporate organizations within our society and the environment. The recognition of the issues and their importance to the smooth running of our society is important and should not be taken with little concern. The government of India has shown the real need for proper management of our corporate actions and we should always copy them to ensure that we keep our organizations alive. The issues discussed greatly borrow from the aspect of transparency and disclosure which needs to be given the upper hand in its running to ensure that we operate on the safe side of management. Transparency is the key to better management and investment, and every institution’s management should be held responsible in case of failure to practice timely accountability.
In conclusion, every member of the corporate institution is entitled to the questioning of the actions of the management (Harford, Mansi, and Maxwell, 2012). The management, therefore, should have the responsibility to win to win the trust of the working staffs and the community to ensure the success of the organization. The total failure of the organization lies in the hands of all the stakeholders an action which should prompt the workers to monitor and seek for clarification in every action of the management (Nakamura and Nagayoshi, 2015). The government should initiate and implement its roles in running the organizations and companies to ensure a sustainable development within the country for the next generation.
Armstrong, C., Guay, W.R., Mehran, H. and Weber, J., 2015. The Role of Information and Financial Reporting in Corporate Governance: A Review of the Evidence and the Implications for Banking Firms and the Financial Services Industry. Economic Policy Review, Forthcoming.
Crane, A., Matten, D. and Spence, L.J., 2013. Corporate social responsibility in a global context. Chapter in: Crane, A., Matten, D., and Spence, LJ,’Corporate Social Responsibility: Readings and Cases in a Global Context, 2, pp.3-26.
Dyck, A., Volchkova, N. and Zingales, L., 2008. The corporate governance role of the media: Evidence from Russia. The Journal of Finance, 63(3), pp.1093-1135. doi: 10.1111/j.1540-6261.2008.01353.x
Harford, J., Mansi, S.A. and Maxwell, W.F., 2012. Corporate governance and firm cash holdings in the US. In Corporate Governance (pp. 107-138). Springer Berlin Heidelberg. doi:10.1007/978-3-642-31579-4_5
Jizi, M.I., Salama, A., Dixon, R. and Stratling, R., 2014. Corporate governance and corporate social responsibility disclosure: Evidence from the US banking sector. Journal of Business Ethics, 125(4), pp.601-615.
Nakamura, J. and Nagayoshi, S., 2015, August. Organization Learning from Failure through Knowledge Network: Case Study on an Engineering Company in Japan. In Multidisciplinary Social Networks Research: Second International Conference, MISNC 2015, Matsuyama, Japan, September 1-3, 2015. Proceedings (Vol. 540, p. 80). Springer.
Raj, S. and Kajla, T., 2015. Sentiment Analysis of Swachh Bharat Abhiyan. Business Analytics & Intelligence, p.32.
Smith, S.S., 2015. Accounting, Governance and Stakeholder Reporting, and Economic Value Creation. The Journal of Applied Business and Economics, 17(2), p.76.doi: 10.1007/s10551-012-1615-9
Timesofindia-economic times. (2016). Take up cleanliness drive for Swachh Bharat: Government tells companies. [online] Available at: http://articles.economictimes.indiatimes.com/2016-06-19/news/73878702_1_cleanliness-drive-swachh-bharat-kosh-csr-activities [Accessed 25 Aug. 2016].
Waldman, D.A. and Balven, R.M., 2014. Responsible leadership: Theoretical issues and research directions. The Academy of Management Perspectives, 28(3), pp.224-234.