The subject of corporate governance leapt to global business limelight from relative obscurity after a

string of collapses of high profile companies. The collapse of Enron leaves a huge scar in modern

business due to their unethical and illegal operations. The result of Enron’s scandal leads to

thousand people losing their jobs and pensions, and all of their shareholders lost the money they

had invested in the corporation. This provokes questions of fundamental aspects of corporate

governance in America and functions assigned to the management of companies, particularly the

role of committees on board, interests of shareholders and reduce the principal-agent problem. 1

Corporate governance is where legal and non-legal principles and practices held in the business

corporation, exercising controls and providing direction to management considering the benefit of

company’s stakeholders carried by the board of directors and committees. 2 In other words, it is

“how investors get the managers to give them back their money”3 .It also concern holding balance

between economic and social goals. The aim is to align the interests of individuals, corporations and

society as near as possible. 4 It is also designed to reduce or eliminate the principal-agent problem

which occurs when an individual (agent) being able to make decision by his own best interest on

behalf of another individual (principal).

In the 1990s, institutional investors’ share of market increase suggested firms will be more effective

monitors of management because it concerns more of firm’s performance to reach profit

maximization. 5The boards remove director suggesting decisions from CEO’s control through

nominating committees. The number of external directors increased during the period as did

1
Peter Grosvenor Munzig , ‘Enron and the Economics of Corporate Governance’ Department of Economics , Standford
University, Standord CA 94305-6072 ( June 2003)
2
Paul J. Sobel, Auditor’s Risk Management Guide (2007): Integrating Auditing and ERM (CCH, Inc ,May 18, 2007)
3
Shleifer ,Andrei and Robert W. Vishny, “A Survey of Corporate Governance,” Journal of Finance 52(2) 1997: 738 (1997)
4
Sir Adrian Cadbury ,Global Corporate Governance Forum,(World Bank, Washington, 2000)
5
Shleifer ,Andrei and Robert W. Vishny, “A Survey of Corporate Governance,” Journal of Finance 52(2) 1997: 738 (1997)
pg 27
directors’ equity compensation as a percentage of their total director compensation. 6 However,

these improvements are immediately shadowed when Enron’s scandal surfaced suggesting that

corporate governance was not immune from failure and highlight flaws of it.

The failure of Enron has shed light to few governance issues. : (i) Kopper whom has a dual role

violating Enron’s own Code of Ethics and Business Affairs7.8 (ii) Misallocation of firm funds due to

principal-agent problem and management abandoned their responsibility to serves as governance

mechanism.9 (iii) Massive incentives for management self-dealings and illegally manipulate financial

statements to boost stock price .(iv) The Compensation Committee lacking of oversight review to

disproportionate compensation for their management. 10 (v) The lack of transparency of financial

reports to shareholders. (v) The lack of independence on Enron’s Board and Andersen’s auditing

services.

Corporate governance functions to protect shareholders’ rights. However it failed to function in

Enron’s case. The result of residual control rights, discretion of managers may engage to own

benefits instead of shareholder’s interest. The expropriation of funds through transfer pricing 11

process shows managers in favor of self-interests manipulating financial statements abandoning

their responsibility to shareholders. Using stock options grants to boost price will also allocate more

costly risk taking , resulting Enron to “became hedge fund taking leveraged bets which produce

6
Holmstorm, Bengt and Steven N. Kaplan, “ The State of U.S. Corporate Governance : What’s Right and What’s Wrong?”
National Bureau of Economic Research : Working Paper 9613 (2003)
7
Enron’s Code of Business Affairs held , “ unless the chairman and the CEO determined that his participation does not
adversely affect the best interest of the Company.” which prohibit conflicting interests in Kopper’s dual position.
8
Power, William C., Raymond S. Troubh and Herbert S. Winokur, Jr. 2002. Report of Investigation by the Special
Investigation Committee of the Board of Directors of Enron Crop. (Febuary 1 2002) , p8
9
Available at http://www.levin.senate.gov/newsroom/press/release/?id=1a9d6624-ec38-49e6-8efd-6f3bce364343
accessed on December 7 2014
10
Peter Grosvenor Munzig , ‘Enron and the Economics of Corporate Governance’ Department of Economics , Standford
University, Standord CA 94305-6072 ( June 2003)
11
Transfer Pricing occurs when managers set up independent companies that they own personally and sell sets of the
main company they run to the independent firms at below market price.
huge, disproportionate bonanza for its executives...downside seemed a problem only for the

shareholders.”12 It is undeniable that executive stock options would align management and

shareholder interest but management which are restrained by amount of funds in firm, is unwilling

to draw attention of shareholder regarding the issue with the fear of being replaced. 13

The technologies used in comprehending entities in balance sheets made transactions complicated

and difficult to be understood by investors, not allowing them to look into firm’s financial

conditions.14 The inaccurate financial statues of firm sabotage the rights of shareholders to make

decision whether to continue to invest or server their shares allocated in the firm. Besides, the

outside investors will have difficulty to recognize nature of partnerships.

Lastly, the unethical behavior was institutionalized in Enron causing the company’s code of ethic

insignificant. Enron is proved not following the spirt of their own procedures of codes of ethic,

conduct and governance.15

WorldCom presents a different situation, where it categorized operating expenses as capital

expenditures, reclassified the value of assets as goodwill including future expenses and manipulated

bad debt reserves calculation. 16 The failure of WorldCom is due to fiasco corporate culture. The

different background of directors at WorldCom17 forms hierarchical nature of organization leading

departments distant from each other lacking awareness on WorldCom’s issues.

12
Gordon, Jeffrey N. 2002. “ What Enron Means for the Management and Control of the Modern Business Corporation :
Some Initial Reflections.” University of Chicago Law Review 69:3 Summer (2002) , pg 1247
13
Bertrand , Marianne and Sendhil Mullainathan, “ Do CEO’s Set Their Own Pay? The Ones without Principals Do.”
National Bureau of Economic Research Working Paper : 7604 (2000) , p3
14
Bebchuk, Lucian A., Jesse M. Fried and David I. Walker. “ Executive Compensation in America : Optimal Contracting or
Extraction of Rents?” National Bureau of Economic Research Working Paper 8661 ( 2001) , p34
15
Watkins, Sherron S, “Ethical Conflicts At Enron: Moral Responsibility In Corporate Capitalism.” California Management
Review 45 : 4 (June 2003), pp. 6-19.
16
J. Randel Kuhn Jr. , Steve G. Sutton , “ Learning from WorldCom : Implications for Fraud Detection through Continuous
Assurance” Journal of Emerging Technologies in Accounting Vol.3 , University of Central Florida (2006)
17
Romney, M. B., & Steinbart, P. J. Accounting information systems (2008)
The Compensation Committee is to supervise compensation of officers 18 but in WorldCom’s proxy

statements, they had the power to determine ‘salaries, bonuses, and benefits’ of the officers. 19 The

lack of independence of board members failed to take any action allowing Ebber’s loans to carry on

–ignoring shareholder interests. Directors dependent on ‘large issuances of equity’ 20 created

conflicting interest where the goals are more focused on growth of stock instead of best interest of

company. Besides that, directors close relationship with Ebbers impotent them to be independent

from doing their task.21 The governance is obviously infringed where shareholders and company’s

interest serves as minimalist in consideration.

Satyam’s scandal has been the greatest scandal in history of corporate world in India, where it is

publicly announced and Raju confessed of having a falsified the account leading to collapsed in price

of company stock. Prevention of an attempt by minority shareholding promoters to use firm’s funds

to buy two companies own by them. This shows CEOs unbridled greed and role of Satyam’s

independent directors termed as ‘unpardonable’, acting against interest of large shareholders. 22 The

rating agencies displayed lack of attentiveness towards assessment of Satyam and refer to

fraudulently prepared and audited financial statements of the firm, thus failing to warn investors

about Satyam’s deteriorating conditions.23 After Satyam, governance issues are more emphasized in

India and were made as reference to prevent the same scenario. This is crucial since India is still a

developing country.

18
Beresford, D. R., Katzenbach, N. d., & Rogers, C. B. J. Report of investigation by the special investigative committee of
the board of directors of WorldCom, inc. (2003).
19
Available at http://etd.fcla.edu/CF/CFH0003811/Ashraf_Javiriyah_201105_BSBA accessed 10 December 2014
20
The form of compensation given to the Board of directors regarding to the stock depended on company growth.
21
Javiriyah Asyraf , “ The Accounting Fraud at WorldCom : The Causes, The Characteristics , The Consequences, and The
Lesson Learned” University of Central Florida (2011)
22
Manpreet Kaur, “ Corporate Governance in India: Case Study of Satyam” Indian Journal of Research 2:22 (Nov 2013)
23
Available on http://www.iodonline.com/Articles/Inst%20of%20Directors-WCFCG%20Global%20Covention-Paper
%20Prof%20J%20P%20Sharma-What%20Went%20Wrong%20With%20Satyam.pdf accessed 10 December 2014
In Tyco’s case, Kozlowski (CEO) took unapproved transactions and abused loan programs of Tyco.

Kozlowski committed the worst violations to ethical codes by creating delusion for investors to

frame them to keep investing while he sold his stock and also, claims to make donations to charity

when is used as ‘tax shield’ for his fraudulent operations24.25 The whole company has immensely

suffered especially the shareholders which depend on information given causing them to lose

money when the stock price falls sharply. ‘Questionable accounting practices’ used and the

autocratic leadership organization culture of Tyco shown that it had established unethical ways used

to gear profits margins to portrait the goodwill of the firm to increase shareholder’s confidence,

which is not true.

From the examples above, it is undeniable that corporate governance has not been adopted. The

firms did not emphasize enough on governance and make it a compliance culture. The term

‘Corporate Governance’ has almost become rhetoric, where it is the most spoken and least doings.

Instead of making it just a lips service, the firm should offer proper training from the top to bottom

based on hierarchy chart.

High performing companies emphasize on character of a person rather than their specific

qualifications because it is impossible to pay people to be committed unless they are willing to give

of themselves to develop a company as equally as they needed the company for income and

24
Maremount and Jerry Markon, “Tyco’s Kozlowski is indicated on Charges of Tax Evasion” Wall Street Journal A1, A7
( June 5 2002)
25
Laurie P. Cohen and Mark Maremount, “ Tyco Ex-Director Faces Possible Criminal Charges” Wall Street Journal A3,A11
( June 18,2002)
benefits.26 Enron’s collapsed is perhaps because of engagement of nefarious attempts due to the

environment which encourage unethical behavior.

The scandals is not just morally affected but also, economically affected. The scandals may lead to

‘wealth-effect’ significantly affecting consumer spending, and lead to reduction in GDP. One of the

reasons of declining in financial markets is due to corporate scandals. 27 This affects the overall

revenue of the local government which will gives impact on state and local budgets for upcoming

activities, the retirement funds and pensions contributing to the people.

Due to the fall of Enron and other companies in the US, the Sarbanes-Oxley (SOX) Act28 became law

and requires all companies to provide year end reports about internal controls of companies and

effectiveness of it. The Act established new financial reporting standards where the information

presented in financial statements of company is under the responsibility of company’s CEO and

CFO29. The Act also consists of criminal penalties for failure of CEO/CFO financial statement

certification30, influencing agency investigation and administration31 and retaliation against

whistleblowers32.

The passing of SOX benefits the firm and investors. Researches shows that SOX enhanced corporate

transparency in cross-listed firms33, improved internal control34of companies leading to increase in

26
Collins, James C, “ Good to Great: Why Some Companies Make the Leap--and Others Don't.” New York: Harper
Business ( October 2001)
27
Carol Graham, Robert E. Litan and Sandip Sukhtankar, “Cooking the Books: The Cost to the Economy” Brookings Policy
Brief Series (August 2002) , 106
28
The Sarbanes–Oxley Act of 2002
29
The Sarbanes–Oxley Act of 2002 , s302
30
The Sarbanes–Oxley Act of 2002 , s906
31
The Sarbanes–Oxley Act of 2002 ,s 802(a)
32
The Sarbanes–Oxley Act of 2002 ,s1107
33
Arping, Stefan and Sautner, Zacharias, “Did SOX Section 404 Make Firms Less Opaque? Evidence from Cross-Listed
Firms” Contemporary Accounting Research, Forthcoming G1,G3(August 1 2012)
34
Available at http://www.section404.org/pdf/09_wall_street_journal.pdf accessed on 10 December 2014
share price, and most importantly, more reliable financial statements 35. However, there are

criticisms saying that SOX a costly government interference into corporation managements causing

them at competitive disadvantage with foreign firms. The smaller international companies are more

likely to list in stock exchanges in the UK rather than US stock exchange. 36

The Sarbanes-Oxley Act is probably the best piece of legislation to protect investors in modern

times, and providing corporate governance and accountability. SOX also prevent fraud cases like

Enron and other corporations to take place again. 37 It encourages ethical culture by forcing top

management to be transparent and employees to be responsible whilst protecting whistleblowers. 38

Compare to the US, the UK used to focus on moral philosophy rather than economics, focusing on

participation and responsibility towards stakeholders. However, things changed after conceptual

framework provided to bring economic theory into mainstream UK company law analysis 39. Law

Commission increasingly utilized economic theory in their company law work and Court of Appeal

use economic analysis deciding in Item Software Ltd v Fassihi40 - showing support. Despite so, moral

philosophy still has a strand in debate.41

In response to scandals, various laws have been passed in many countries on issues of corporate

governance. In recent years, there has been a strong trend towards the adaptation of ‘soft

35
Rittenberg, Larry and Miller,Patricia , “Sarbanes-Oxley Section 404 Work: Looking at the Benefits” The IIA Research
Foundation (January 2005)
36
Piotroski,Joseph and Srinivasan,Suraj ,"Regulation and Bonding: The Sarbanes-Oxley Act and the Flow of International
Listings"Journal of Accounting Research (May 2008)
37
Available at http://bizfinance.about.com/od/smallbusinessfinancefaqs/a/sarbanes-oxley-act-and-enron-scandal.htm
accessed on 10 December 2014
38
Available at http://law.bepress.com/cgi/viewcontent.cgi?article=8640&context=expresso accessed on 10 December
2014
39
Cheffins Company Law : Theory, Structure and Operation ( Oxford, OUP, 1997)
40
Item Software (UK) Ltd v Fassihi [2004] EWCA Civ 1244
41
Alan Dignam and John Lowry, Company Law ( 7 th edn, OUP, 2012), p424-425
regulation’42 in form of codes of corporate governance. The codes can be defined as ‘a non-binding

set of principles, standards or best practices, issued by a collective body and relating to the internal

governance of corporations43’.

These codes first arise from The Cadbury Report which addresses issues such as relationship

between the chairman and chief executive, the role of nonexecutive directors and reporting on

internal control on company’s position.44 The recommendations in the report containing set of rules

addressed to directors of all listed companies in the UK, and many are still in force today. The

trademark in the report is ‘comply or explain’ approach, where the companies need to report

whether they had followed the recommendations, and requires explaining why they had not done

so.45

Despite going through numerous changes subsequently updating the Code to reach the qualified

corporate governance practice, the ‘comply or explain’ approach is still retained. Today, the UK

Corporate Governance Code is regarded as international benchmark for good corporate governance

practice.46 This approach shows flexibility, allowing companies to make choices whether to comply

with its principles contrasting to US concept of corporate governance. The merit is due to the idea of

encouraging companies to adopt spirit of the Code rather than compliance statutory exercising. It

42
Sahlin-Andersson K, ‘Emergent Cross-Sectional Soft Regulations: Dynamics at Play in the Global Compact Initiative’
(2004)
43
Weil, Gotshal and Manges LLP, “ International Comparison of Selected Corporate Governance Guidelines and Codes of
Best Practice” New York (2003)
44
Available at https://www.frc.org.uk/getattachment/1db9539d-9176-4546-91ee-828b7fd087a8/The-UK-Approach-to-
Corporate-Governance.aspx accessed 12 December 2014
45
Seidl, D., Sanderson, P. and Roberts, J., “Applying "comply-or-explain": conformance with codes of corporate
governance in the UK and Germany” Centre for Business Research, University of Cambridge Working Paper No. 389 (June
2009)
46
Arcot, Sridhar and Bruno, Valentina and Faure-Grimaud, Antoine ,“Corporate Governance in the UK: is the Comply-or-
Explain Approach Working?” Corporate Governance at LSE Discussion Paper Series No 001 (November 2005)
needs to be implemented regarding to the culture of individual company which may vary

enormously from different companies depending on their individual factors. 47

Although it is not compulsory for companies to implement the Codes, companies need to make

explanations which measures up to the expectations of shareholders. The stronger explanation

provided will be less likely to be rejected by shareholders adopting a box-ticking approach.

Shareholders may apply pressure to persuade the board to change its mind, indirectly deciding level

of compliance as shown in Morrisons’ case48. Codes are not compulsory but exist for guidance and

represent best practice.49

This flexible mechanism enables companies to adopt a different approach which is more appropriate

to their circumstances, without imposing requirements that are excessively burdensome and costly,

especially for small companies. Also, it encourages introduction of new provisions promoting

innovation which belief that it will lead to better governance in substance. Therefore, it allows

companies to think of the purpose of provision rather than just ‘tick the box’ helping companies

internalize it as their own norms.50

Whether the company’s governance practices are effective, the assessment of sustainable success

of company is made by intended beneficiaries – shareholders. Therefore, shareholders need to have

sufficient information to make judgments on governance practices of companies and rights to

47
Available at https://www.frc.org.uk/getattachment/1db9539d-9176-4546-91ee-828b7fd087a8/The-UK-Approach-to-
Corporate-Governance.aspx accessed 12 December 2014
48
W M Morrison Supermarkets PLC [2013] UKUT 0247 (TCC)
49
Available at http://www.out-law.com/page-8214 accessed 12 December 2014
50
Available at http://www.icaew.com/en/technical/corporate-governance/dialogue-in-corporate-governance/when-is-
comply-or-explain-the-right-approach accessed 13 December 2014
influence the board when they disagree. For system to work efficiently, appropriate regulatory

framework is needed.51

The ‘Comply or Explain’ approach basic premise has been adopted by several other countries such

as Austria and Germany. However, the German Corporate Governance Code uses two-tier system

where supervisory board plays an active role to advice and control management board with

company’s best interest. This system concerns the independency of supervisory board and its

members to ensure effective governance.52 The boards play a massive role in German due to their

acknowledgement of companies’ circumstance; whereas in the UK, shareholders still have sayings

despite having insufficient knowledge of companies’ operations.

In the US where Sarbanes-Oxley Act codified as law shows a stricter approach towards corporation

governance due collapsed of Enron. This contrasts with the UK whom adopts uncodified

constitution. There is no room for flexibility in US since they are one of the developed countries

which play a massive role in worldwide economy. If the US companies did not fulfill the

requirements stated in the act, it will be held as crime. While in the UK, the Boards are required to

give explanation which meets expectation of shareholder interest. Coherently, US are more

economical based where UK lean more to moral philosophy.

In Malaysia, the practices of governance mechanism can be analyzed from directions in master plans

so as orders from regulatory bodies. The Malaysian Code on Corporate Governance 2000 is perhaps

almost aligned with UK Corporate Governance Code, however Malaysia’s state of corporate

governance is highly intertwined with pervasiveness of race based affirming in all aspects of
51
Available at https://www.frc.org.uk/getattachment/1db9539d-9176-4546-91ee-828b7fd087a8/The-UK-Approach-to-
Corporate-Governance.aspx accessed 12 December 2014
52
Seidl, D., Sanderson, P. and Roberts, J. (2009) 'Applying "comply-or-explain": conformance with codes of corporate
governance in the UK and Germany' Centre for Business Research, University of Cambridge Working Paper No. 389 (June
2009)
companies53. Besides Malaysia aims to improve quality earnings among firms thus, discretionary

accrual was used for earnings management and was regressed on two governance mechanism:

board of directors and audit committee.54

Malaysian Code is constantly under review to improvise the regulations adopting by country’s

circumstances. The public interpreted that unethical corporate behavior in country is due to poor

regulations affecting the judiciary system. Therefore, the judge has to meet criteria laid down by

government resulting prosecutors is under pressure to meet the government goals instead of public

interests55, shown in Pancaran Ikrab Berhad56 case. Government intervention using political

decisions is the main reason of failure to reach the primary objective of corporate governance acting

as stakeholders safeguard mechanism. 57

It is suggested that perhaps Islamic ethics could be a possible solution to prevent unethical

governance acts since Malaysia highly intertwined with race based in different aspects of corporate

sector. By applying religious theories, it educates a person to uphold moral values in their lives. It

should be adopted since young encouraging one to observe matters spiritually rather than the letter

of law. However, this suggestion concluded with criticism as there is substantial lack in theories

since some people do not believe in religion and even so, they do not believe it should be apply in

one’s daily life.58

53
Abidin , Nor Azizah Zainal and Ahmad , Nasibah., “Corporate Governance in Malaysia: The Effect of Corporate Reforms
and State Business relation in Malaysia” Asian Academy of Management Journal 12:1 (January 2007)
54
Tham, Joel and Romuald D. Fomedjou, “ The Impact of Corporate Governance Mechanism and Corporate
Performance: A study of Listed Companies in Malaysia” Journal for the Advancement of Science & Arts 3:1 (2012)
55
Ahmad Saiful Azlin Puteh Salin, Norlela Kamaluddin and Siti Khadijah Abdul Manan “Unstoppable Fraud, Scandals and
Manipulation – An Urgent Call for an Islamic-based Code of Ethics” International Conference on Sociality and Economics
Development IPEDR vol.10 (2011)
56
PANCARAN IKRAB BHD (271441-U)
57
Nor Azizah Zainal Abidin, “Tadbir Urus Korporat di Malaysia: Reformasi Dasar Kerajaan dan Hubungan Politik dan
Perniagaan” Master's thesis, University of Malaya. (2004)
58
Ahmad Saiful Azlin Puteh Salin, Norlela Kamaluddin and Siti Khadijah Abdul Manan “Unstoppable Fraud, Scandals and
Manipulation – An Urgent Call for an Islamic-based Code of Ethics” International Conference on Sociality and Economics
Development IPEDR vol.10 (2011)
Compare to the UK, Malaysia Governance Code is less rigid and comprehensive as Malaysia is still

taking baby steps to implements Codes suitable for the multi-racial based country which requires all

aspects of considerations to prevent injustice and racism issues.

Tesco’s scandal which is due to profit exaggeration to make their performance more appealing and

PwC (external auditor) allows Tesco to get away with overestimation in profit. Despite already warn

Tesco of ‘risk of manipulation’ in commercial income account 59, PwC effort in protecting

shareholder’s interest is still insufficient.

In Malaysian Scenarios, the Transmile Group and Megan Media scandals are regarded as mini-

Enron shocking the local securities market. Both scandals has identical unethical issue involving

external auditor not highlighting the problems in companies’ accounts in board meeting and even

engaged in engaged in the activities. This shows that unethical behavior of one not considering

shareholder interests. The auditors breached the scope of their job to highlight the problems in

accounts, showing failure of governance behavior.

Perhaps it is true that Corporate Governance is already in practice, but the importance of corporate

governance is not emphasized enough in the current globally expanding and competitive market.

Improving governance and continuously have them updated is crucial in this blooming economy to

prevent another Enron’s case. This improvement could be done through legislation or regulation.

59
Available at http://www.ft.com/intl/cms/s/71118e80-4a20-11e4-bc07-00144feab7de,Authorised=false.html?
_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F71118e80-4a20-11e4-bc0700144feab7de.html
%3Fsiteedition%3Dintl&siteedition=intl&_i_referer=http%3A%2F%2Fhkcompanylawblog.com
%2F2014%2F10%2F29%2Ftitle-to-be-provided-2%2F#axzz3HSSVzYjI accessed 14 December 2014
The legislation regarding to this issue should have law validity as reminder for companies that it is

illegal to do such unethical act. Therefore, Sarbanes-Oxley Act is regarded as the best piece of

legislation. However, the Governance Codes which is adopted in several countries shows flexibility.

Perhaps the ‘explain’ approach to shareholders considered as sufficient for the board to make

decisions, however it is only efficient when shareholders has knowledge and accurate information

presented to them.

The agency and stakeholder theory should reconciled and develop “responsive codes of practice”

that incorporate relevant parties in the preparation, monitoring and amendment of codes. 60

Multinational companies have a critical role to uphold and advance corporate governance to social

and environmental standards, especially in less developed countries. They could offer proxy voting

to give shareholders to discharge board members. Most corporate fraud are due to greed, thus the

executive’s pay should be fully disclosed. Companies should outline strong whistle-blowing

framework to employees to emphasize on ethics. 61

The independence of directors is necessary component to be maintained and they are supposed to

be a free individual not relating to managements, being able to exercise independent judgment

based on significant business experience. Truly independent board members are crucial because

there are several examples of the scandals involving the unprofessionalism of the board allowing

the unethical behaviors to prevail.62 Not only shareholder interest and company revenue should be
60
Donaldson, John and Fafaliou, Irene, “Business ethics, corporate social responsibility and corporate
governance: a review and summary critique” European Research Studies Volume VI, Issue (1-2) (2003)
61
Nathan E. Hurst,” Corporate Ethics, Governance and Social Responsibility:Comparing European Business Practices to
those in the United States” A Study Conducted for the Business and Organizational Ethics Partnership Markkula Center
for Applied Ethics (2004)
62
Richard Y. Roberts, “Suggestions to Improve Corporate Governance” National Association of Corporate Directors
Annual Corporate Governance Review Washington, D.C. (November 1 ,1993)
focus on, stakeholders’ interest should also be considered as whole to achieve true governance

behavior.

Corporate governance should not be just merely a term, and should be practiced in all companies to

deliver ethical behavior resulting long-term success of companies.

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