Source oecd 2010 corporate governance and the

Source: OECD 2010, Corporate Governance and the Financial Crisis: Conclusions and Emerging Good
Practices to Enhance Implementation of the Principles , accessed October 2015,
.
There is no imperative statement by the OECD that the chair should not also be the CEO.
The fact that, in many US corporations, ‘presidents’ are the chair and the CEO at the same time
is perhaps an influencing factor in the OECD conclusions. However, it seems that this policy is
slowly achieving traction even in the United States. As noted earlier, there is a gradual trend
in S&P 500 companies in the United States towards separating the roles of chair and CEO.
Nonetheless, the importance of independence, or independence protocols, is clearly identified
in the United States in Sarbanes–Oxley and in other governance systems principles.
Continued evolution of corporate governance
This brief discussion of potential improvements to corporate governance shows that it is a
constantly evolving process rather than something that has already been finalised and perfected.
There are many more opportunities for improvement that hopefully will limit the effect of
economic downturns in the future and improve the performance of organisations.

W:\CPA-Production\CPA Course Material\CPA 118 E&G_2nd edition\E&G-Module-03\147537_eg_m03_2nd-edn_140218.indd DTP: Mira 1-PP 2nd edn 08-03-18
MODULE 3
258
|
GOVERNANCE CONCEPTS
Review
This module explored the importance of having clear principles in place for guiding organisations
to achieve their objectives while conforming to expected business behaviour and rules.
It included explanations of how governance is the way in which organisations are directed
and controlled, and how the various stakeholders actually perform their governance roles.
Directors, with their relevant duties and obligations, have the greatest role in governance,
and also the power to have the most impact, both positively and negatively, on the organisation.
Shareholders, auditors and regulators all have roles to play to ensure that problems are quickly
identified and rectified, and to help organisations pursue their goals and objectives appropriately
and successfully.
After considering the development of corporate governance best practice over the past 30 years,
the module focused specifically on best practice principles as outlined in the OECD Principles,
the FRC Code and the ASX Principles. This included a detailed review of specific items that have
been recommended as helpful or essential for ensuring good governance in both corporate and
non-corporate sectors.
We then looked in more detail at the non-corporate sector (including family-owned businesses
and SMEs, not-for-profit organisations and the public sector), discussing some of their
characteristics and their significance to the economy.