The Nature Of Corporate Governance Culture In Certain Asian Countries Essays Examples
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The Nature of Corporate Governance Culture in Certain Asian Countries
Corporate governance is a fundamental aspect of management that has recently been adopted by virtually all corporate entities in Hong Kong. It does not only deal with a commercial aspect of a company, but also its corporate social responsibility towards the community it serves (Strebel 2011, 609). All stakeholders including the directors, owners, as well as corporate managers now take cognizance of the fact that the benefits of well-founded corporate governance is essential for business growth and development. For instance, good corporate governance increases business profit, high share price, and wide avenues as source of capital. Investors will rarely be attracted to companies that do not subscribe to good corporate governance. Corporate governance has been in the spotlight in recent years. The scandals taking place in big companies have raised eyebrows over weaknesses inherent in corporate governance in Asian countries. These weaknesses led to the economic recession the continent has experienced in the recent past.
In this study, the definition adopted for corporate governance is that fronted by the Organization for Economic Cooperation and Development (OECD). It is a set of relationship between all stakeholders in a company, which includes management, board of directors, shareholders, and other stakeholders. It is a system that provides the structure through which the company’s objectives are monitored and determined (OECD 2004, 5). Virtually all companies exhibit a relationship between the physical and legal persons with a vested interest in the operation and performance of the business. The management must, therefore, take into account all conflicting interests both internally and externally.
There are various models of corporate governance. However, Ooghe and Langhe (2002, 3) argue that it would be unfair to carry out a comparative analysis of the benefits that come from different corporate governance models. They aver that the purpose of corporate governance analysis is not about what model is best suitable but rather how best to undertake the governance. This determination is crucial, for instance, in Asia where culture has a huge influence on how business is conducted (Witt 2012, 3). In this study, I will analyze corporate governance in a media company called Clear Media Company. I will briefly outline the background to the case study and explain which corporate governance issue arose and how it arose. I will also give the implication of these issues on the company.
Clear Media Limited is a holding company, which runs as an outdoor media company in China. The company, which is a subsidiary of Clear Channel KNR Neth Antilles NV, has its headquarters in Causeway Bay, Hong Kong (Clear Media Company 2006, 1). The company provides bus shelter and billboard advertising services to its customers. Other services include serving beverages, Information Technology, Telecommunication, reality show, entertainment, e-commerce, and health products industry. The company was established in 1986 and as at December 31, 2013, it had accumulated advertising capacity of approximately 38,000 panels spread in 27 cities in China’s mainland.
Clear Media Company is keen on its own model of corporate governance. The model is based on fostering and upholding high standards of business ethics, which include transparency, responsibility both corporate and social, as well as value driven management for its operations. The main objective of the company is to improve the confidence of all shareholders, investors and other stakeholders in the international as well as national markets (Clear Media Company 2006, 4). The management is vested with the responsibility to ensure that the interests of all stakeholders are well managed. The company has therefore adopted a code of conduct, which has set out the Clear Media corporate governance practices.
Background to the Corporate Governance Issue in Clear Media Company
In February 2004, in a bid to enhance transparency and autonomy of the management, Clear Media Company established the nomination committee, which consists of not less than three members. Clear Media Company (2006, 2) assert that these members are appointed from amongst the Directors so as to ensure independence and objectivity. The committee is responsible for recommending to the board regarding the appointment of directors and senior management. Other responsibilities of the committee include:
Reviewing the composition of the Board and consider its advice regarding changes to be effected so as to get a balanced and a qualified Board.
Consider recommendations from the board regarding the appointment of directors including the chairman.
Clear Media Company corporate governance policy demands that all directors, executives, and employees should abide by laws and regulations governing the operation of the company. They must act with respect, confidentiality, integrity, objectivity, and ethics in all dealings involving the company. The interest of the company should be of paramount importance in such dealings (Witt 2012, 6). The board appointed by the committee recognizes the important role that a clean and healthy environment plays in the company’s operation. The company has improved on the standard of living for those people it serves by ensuring that the health and safety of employees and customers in protected. It therefore, donates around ten percent of its advertising panels to the local government to promote community events.
Clear Media Company recognizes responsible investment as a means to achieve responsible journalism. It also helps the group to achieve its mission of providing quality service and help the investors’ secure financial security in the future. Clear Media Company (2006, 5) argue that this goal can only be achieved through investing in essential sectors such as environmental, social and governance. The 2003 report illustrates how these issues are important to the corporate structure of the company. They helped the company in mitigating investment risks while at the same time improving its return.
Few years after the implementation of these plans, the company has enjoyed high returns on investment coupled with an increase in the share price. The company has therefore immensely benefited in this corporate governance model. It continues to include them in all investment decisions not only for financial benefits but also from a social responsibility point of view. The management demands that all its subsidiaries comply with accepted best practices in business activities that promote transparency, autonomy, and objectivity (Clear Media Company 2006, 8).
The UN through the global compact illustrates standards to apply to businesses and their activities. These standards must respect human rights, labor rules, sustainable environment, and fight against corruption. Clear Media Company has incorporated these issues in its model of corporate governance. The aftermath of financial recession in Asia shows that transparency and accountability remain extremely relevant to the sustainability of the financial system and corporate governance. Poor corporate governance can cost a business a lifetime opportunity to improve on its investment. The company has, therefore, secured all loopholes that could lead to these sad circumstances. It is imperative that all stakeholders continue to support the nomination committee so as to guarantee business success.
Clear Media Company. 2006. Corporate Governance. Clear Media Limited, Causeway Bay,
Hong Kong, China.
OECD 2004. Principles of corporate governance, Organization for Economic Cooperation and
Ooghe, H. & Langhe, T.D. 2002. The Anglo American versus the continental European
Corporate governance model: empirical evidence of board composition in Belgium. European Business Review, 14(6), pp.437 – 449.
Witt, A.M. 2012. Editorial , Asian Business & Management, 11(1), pp.1 – 4.
Strebel, P. 2011. In touch boards: reaching out to the value critical stakeholders, Corporate
Governance, 11(5), pp.603 -610.
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