Introduction
Corporate governance is more than just board processes and procedures. It involves the full set of relationships between a company’s management, it’s board, its shareholders and its stakeholders, such as its employees and the community in which it is located (Witherell 2000, p. 25).
The focus of corporate governance activity is normally directed toward the internal workings of the company and involves the balancing of the advantages of the corporate form which includes the separation of ownership and management functions that ensures limited individual liability for corporate losses with the need to exert effective oversight over managerial decision-making. It normally combines a strong measure protection for shareholder interest over both the short and long term, while also balancing those interests with those of a wider stakeholder community. Mechanisms of corporate governance do this by reviewing corporate strategy, regulating the company’s overall exposure to financial and other risks, and ensuring that stringent procedures for internal and external auditing and fiscal transparency are in place. The typical governance structure includes a board of directors composed of a number of senior company executives and outside non-executive members who are not involved in the day-to-day management of the company (Dematosi 2002, p. 423). Corporate Governance according to Tricker (1997), is concerned with holding to account the modern corporation, whether it be a large or small holding company and subsidiaries, listed, private, government or non-profit entity (cited in Kakabadse 2001, p. 19). One influential interpretation of corporate governance is to find a way to maximize wealth creation in a manner that does not impose inappropriate costs on third parties or on society as a whole (Monks and Minow, 1996 cited in Kakabadse 2001, p. 19). Within this definition, wealth creation is assessed fro a macro (stakeholder) perspective, including the wealth created for employees and the community as well as investors, thus requiring control and supervision in order to prevent stakeholder claims. Hence, the aim of corporate governance is to evaluate options by measuring them against the goal protecting individual liberty, maximizing wealth in a sustainable way and managing change, which requires a balance of power between the distinct elements of the corporation. From this perspective, corporations are seen as having multiple responsibilities, needing to balance competing conditions, such as long and short term notion gain, profit and sustainability, cash and accounting concepts of value, democracy and authority, power and accountability. Thus the focus is on the way enterprises are governed, as distinct from managed, highlighting the relationship between boards and their shareholders, the company regulators, the auditors and other legitimate stakeholders inside and outside the enterprise, and between directors and top management (Kakabadse 2001, p. 19). Overall, effective corporate governance application requires a system of checks and balances to define appropriately the parameters of authority, and limit the abuse of that authority or power through accountability, while assuring that the right questions get asked of the right people. Moreover, considering that the pace of change is increasing, corporate governance is viewed as being needed to enable corporations to respond to, effect, and even lead, change (Monks and Minow 1996 cited in Kakabase 2001, p. 20).
The Organization for Economic Co-operation and Development’s (OECD) Principles of Corporate Governance cover five areas (Sparkes 2002, p. 235). These are:
1. The corporate governance framework should protect shareholders’ rights, they should receive timely and accurate information about a company where they are investors, and they should have the right to participate in major decisions.
2. The corporate governance framework should ensure the equitable treatment of all shareholders, including minorities and foreign shareholders; in particular, members of the board and executives should disclose any material interests in transactions.
3. The corporate governance framework should recognize the rights of stakeholders in corporate governance, there should be cooperation between corporations and stakeholders on issues like jobs, the local communities, suppliers and the environment.
4. The corporate governance framework should ensure that timely and accurate disclosure is made on all material matters regarding the corporation. This includes ownership and governance as well as financial disclosure, and information material should be audited.
5. The corporate governance framework should ensure the strategic guidance of the company, the effective monitoring of management by the board’s accountability to the company and the shareholders.
The principles can be summarized in terms of four values. These are:
1. Equitable treatment/Fairness
2. Responsibility
3. Transparency
4. Accountability
These values link corporate governance to important elements of governance in broader sense: the battle against bribery and corruption; corporate responsibility and ethics; public sector governance; and regulatory form (Witherell 2000, p. 28).
Research Question
This research aims to answer the question “What are the corporate governance practices of listed companies in Ghana?” Specifically, this research aims to answer the following questions:
1. How is corporate governance being implemented in Ghana?
2. What are the government policies related to corporate governance in Ghana?
3. How do public listed companies in Ghana implement OECD principles in corporate governance?
4. Are the Corporate Governance Code of the Securities and Exchange Commission of Ghana being followed by public listed companies?
5. What are the provisions of the Listing Rules of the Ghana Stock Exchange on Corporate Governance?
6.How effective is corporate governance in Ghana and what are the possible steps that the government and public listed companies can employ to ensure transparency and accountability?
Research Methodology
The planned methodology is secondary research. The researcher will make use of published materials such as books, magazines and newspapers to collect data and information regarding the topic. The researcher will also make use of the internet to obtain information about the company such as its background and other related information. For the research, the researcher will mainly rely on secondary data in obtaining the information. Due to inaccessibility of the subject or the case study, other research methods are not applicable. Secondary data are data that have been collected for some other purpose. Secondary data can provide a useful source from which to answer the research question(s). Punch (1998) mentions several advantages of using existing data. Expenditure on obtaining data can be significantly reduced and data analysis can begin immediately, so saving time. Also, the quality of some data may be superior to anything the researcher could have created alone (Thomas, 2004, p. 191). On the other hand, the chosen research method also has several disadvantages. Data that have been gathered by others for their own purposes can be difficult to interpret when they are taken out of their original context. It is also much more difficult to appreciate the weak points in data that have been obtained by others. The data may be only partially relevant to the current research question (Thomas, 2004, p. 191).
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