That is a natural bridge to this Article’s main goal of exploring Omnicare through the lens of corporategovernance and fiduciary responsibility. 11 Part IV addresses this issue. Arguably, Omnicare made a poor legal decision in its contracting practices. Federal securities law cases challenging disclosure about legal compliance are common in the aftermath of a big corporate penalty for a violation of federal or state law. 12 Derivative lawsuits are brought under state corporate law in the same circumstances, complaining that the board of directors failed to prevent the wrongdoing through inadequate monitoring. In Delaware, these so-called “Caremark cases” 13 have dwindled in importance because the Delaware courts have made them extremely difficult for shareholders to win on the merits, insisting on proof that the directors acted in bad faith. 14 There are many interesting connections between these two lines of cases despite—or maybe because of—their different trajectories. There is also a growing perception from a variety of other authorities—the Justice Department, the SEC, and other financial regulatory agencies—that boards of directors must become more deeply involved in legal and disclosure quality control in any event. 15
The great diversity of Legal and Regulatory Compliance topics throughout the day encourages your team to attend sessions on different streams. Whether your objective is to learn the latest best legal and business practices, catch up with the latest regulatory updates,, establish networking with Asia’s prominent professionals or simply to visit the legal technology and solutions exhibition, the IAS 2015 is definitely an event you cannot miss! Come and join us to explore your business opportunities at the Innoxcell Asia Symposium 2015 in Singapore!
Corporategovernance in a risk society
Under conditions of growing interconnectedness of the global economy more and more stakeholders are exposed to risks and costs resulting from business activities that are neither regulated nor compensated for by means of national governance. The changing distribution of risks poses a threat to the legitimacy of business firms that normally derive their legitimacy from operating in compliance with the legal rules of democratic nation states. However, dur- ing the process of globalization the regulatory power of nation states has been weakened and many production processes have been shifted to states with weak regulatory frameworks where businesses operate outside the reach of the democratic nation state. As a result, busi- ness firms have to address the various legitimacy challenges of their operations directly and cannot rely upon the legitimacy of their regulatory environment. These developments chal- lenge the dominant approach to corporategovernance that regards shareholders as the only stakeholder group in need of special protection due to risks not covered by contracts and legal regulations. On the basis of these considerations, we argue for a democratization of corporategovernance structures in order to compensate for the governance deficits in their regulatory environment and to cope with the changing allocation of risks and costs. By way of demo- cratic involvement of various stakeholders, business firms may be able to mitigate the redis- tribution of individual risk and to address the resulting legitimacy deficits even when operat- ing under conditions of regulatory gaps and governance failure.
Finally, if the financial literature does not lead to a clear consensus on the relationship between corporategovernance and performance, Odegaard Bohren (2004) identify several arguments to account for this divergence: First, the use of partial approaches and the manner to aggregate corporategovernance mechanisms in an index may be biased and lead to skewed findings. Second, due to the fact that most studies are context-specific, findings are often non-generalizable. Indeed, most of the works have been conducted on American firms with large size; hence, their results cannot be generalized on smaller firms or those operating in different legal environments. Third, studies have used various measures of performance: whether accounting measures or more sophisticated measures such as productivity indicators, this explains divergences in the findings. And fourth, the treatment of endogeneity of the relationship between corporategovernance and performance has been either neglected or badly treated.
The banks with which the Group operates are leading Spanish and international entities of renown; however, the counterparty risk in investments and financial instruments contracts is analysed.
Industrial risks, prevention and safety
The safety control system applied is included in the “Risk Prevention Manual” and its “Basic Standards”, in accordance with the OHSAS 18.001-2007 international specifications. Also in place are action procedures that reflect the standards developed in accordance with best practices, which ensure the maximum possible level of safety, paying special attention to the elimination of risk at source. The objective of this system is ongoing improvement in risk reduction, focused on various activities, such as work planning, the analysis and monitoring of corrective actions derived from incidents and accidents, internal audits, periodic inspections of the facilities and supervision of maintenance work and operations.
This paper examined the legal and regulatory environment of corporategovernance and financial reporting practices in Ethiopia. After preparing an index for corporategovernance items, data were collected from secondary sources using qualitative research through review of legal documents (such as Commercial codes, various proclamations, regulations and directives, etc.). The empirical results of the study has revealed that there is no adequate provision that requires the reporting of the Corporategovernance characteristics and issues such as ownership structure, board size, board qualification, training, selection process, tenure period, age limit, internal control systems, audit rotation, and others issues like environment report, labor relation, social responsibility, risk management and the like either in Commercial code of 1960 or in the memorandum and articles of association or other special laws issued for regulating purpose by regulatory bodiesand no mandatory minimum disclosure requirementsof items that should be reported on the annual reports but organizations are disclosing voluntarily.
By instituting the governance structures as described above and specifying a risk management and internal control framework for the operational units, the Managing Board has established the internal environment for enterprise risk management. The DSM Values and Requirements as well as policies in the field of finance and economics (page 74), human resources, safety, health and environment (SHE), security and legal affairs define the 'tone at the top' with regard to ethical behavior and doing business. Strategies are established for every unit and translated into clear objectives, amongst others, with regard to business, markets, innovation, financial results, SHE and social matters. The objectives are reviewed in the
• progressing projects, maximising revenue, managing risks and preventing or dealing with disputes;
• managing the legal aspects of contracts/agreements, including negotiating, establishing, maintaining and reviewing;
• raising awareness and knowledge of relevant legal matters throughout the University;
• engaging and managing external lawyers;
8 ( Hunter, McCarth, & D’Alessandro, 2017) noted that the issues in trade relations between the United States and Malaysia as its written from the standpoint of a composite American automobile parts manufacturer which is attempting to penetrate the Malaysian automotive market. The article raises questions relating to United States and Malaysian trade policies, optimal entry strategies, and intellectual property issues. As both the U.S. and Malaysia are members of the Asia Pacific Economic Cooperation Pact, economic ties between nations have been strongly encouraged. The safest and most efficient way for Glotz to proceed in attempting to enter the Malaysian market is to form a joint venture with a local entity and to produce its product line solely for use by Malaysian automotive makers — at least initially. As an entry strategy, this will gain the trust of the Malaysian government and will hopefully ensure that legal issues relating to foreign investment in the Malaysian market will be handled in a most expeditious and fair manner.
n One had provided legal advice to the company for many years prior to his appointment and had been a director for 10 years
n Chairman was a former Andersen partner and continued as an Andersen consultant after his retirement. He held the position of chairman of the audit committee while working as a consultant to Andersen
be less binary in its application, but which could signal more subtle differences between banks without catastrophically undermining the bank in question.
425 For the most part the accounts are little more than a series of rearward looking financial key performance indicators that have been drawn up on the basis of normative accounting rules which may well render the data increasingly inappropriate for decision making purposes. Of course the accounts are normally drawn up under the “going concern” principle, which pre-supposes that the organisation will continue to exist throughout the following reporting period. But neither the financial statements, nor the audit address many of the forward looking risk issues that are of interest to stakeholders today. In particular they do not address the sustainability of the business model, nor do they look in any depth at systemic risks in an industry or economy as a whole, even though in the current era of significant concentration of the audit market (no major bank is audited by a non Big-4 Firm of auditors) it ought to be feasible to benefit from their collective knowledge across the sector.
one and two years in the future, and 0 otherwise. The t-statistics are based on robust standard errors adjusted for clustering at the six-digit CNUM code from CRSP (Petersen, 2008).
[Table 3 about here]
Model 1, which contains only accounting ratios and firm characteristics as explanatory variables, serves as the base model. Consistent with expectations, the results for Model 1 suggest that more profitable and liquid firms have a lower probability of bankruptcy and that higher leverage increases the probability of bankruptcy. We also find that larger firms and firms with higher stock prices and lower volatility have a lower probability of bankruptcy. There is no relationship between stock returns and the probability of bankruptcy two years before bankruptcy, but higher stock returns one year prior to bankruptcy are associated with a significantly higher probability of bankruptcy. This is consistent with the notion that in any given period, firms that generate the highest stock returns are likely to be more risky than average. Consequently, a high stock return is likely to be an indication of risk, where more risky firms are more likely to become distressed at some point.
Our study attempts to evaluate the relationship between the disclosure of information by companies and several variables of corporategovernance as well as variables of control. The corporategovernance variables that have been used in this study are the following: the size of the board, the independence of the board and the percentage of capital held by the council/board. The variables of control that have been evaluated are: the size of the company, debt, liquidity and the profitability of the company. The sample in this study consists of 24 non-financial companies that were listed on the Madrid Stock Exchange at December 31, 2014. The data of these companies has been obtained from corporategovernance reports, which have been published on the website of the National Securities Market Commission from which we got information on the corporategovernance variables and we have used the SABI database to get the data on the variables of control. In order to create the index for our research, we have used the methodology of Cabedo and Tirado (2009) in order to be able to quantify the level of disclosure by companies. The methodology that has been employed to evaluate the hypotheses is a regression analysis which is estimated by ordinary least squares. The results that we have obtained from our sample show that there is no significant relationship between the created index of risk disclosure and the variables that we have analysed.
Koninklijke DSM N.V. (Royal DSM) is a company limited by shares listed on NYSE Euronext, with a Managing Board and an independent Supervisory Board. Members of the Managing Board and the Supervisory Board are appointed (and, if necessary, dismissed) by the General Meeting of Shareholders. The Managing Board is responsible for the company's strategy, its portfolio policy, the deployment of human and capital resources, the company’s risk management system and the company's financial performance and performance in the area of sustainability. The Supervisory Board supervises the policy pursued by the Managing Board, the Managing Board's performance of its managerial duties and the company's general course of affairs, taking account of the interests of all the company's stakeholders. The annual financial statements are approved by the Supervisory Board and then submitted for adoption to the Annual General Meeting of Shareholders, accompanied by an explanation by the Supervisory Board of how it carried out its supervisory duties during the year concerned.
3. The Board accepts that the Operational Risk Systems and Controls will need to relate to those already existing for credit, market, liquidity and insurance risk. In some cases they will overlap, and in other areas the Systems and Controls will be additional.
have recognized the dangers in the subprime market and begun to de-lever (debt to equity ratios were 30:1 at Lehman and Morgan Stanley). 20 With the benefit of hindsight, it seems that UBS’s internal controls systems were not adequate, that risk managers were using incomplete information and incomplete models, and that UBS had a culture that was focused on short- term profits and, in the words of the report, had “[i]nsufficient incentives to protect the UBS franchise long-term.” 21 But even with the risk management systems then in place, one may ask why risk managers could not anticipate the crisis. I suspect that many risk managers did, in fact, recognize the problems in the housing and credit markets before the crisis, but obviously did not anticipate the magnitude of the problem, nor appreciate the interconnectedness of financial institutions. Some probably did express their concerns to management, and perhaps their concerns were discounted. A better question might be to ask why managers believed that they could time the market so that they would be able to stop dancing just as the music stopped playing, sure in the knowledge that risks would have been passed along to someone else or adequately hedged, and that we would make the fabled “soft landing” that Fed Chairman Ben Bernanke predicted in February 2007. 22 A partial answer to this question may be found in behavioral explanations of the Financial Crisis, but a simple explanation may also be found in the incentives of the managers. Citigroup, for example, had to “keep dancing,” as Chuck Prince put it, in order to stay competitive with other banks. The low rates brought about by Fed policy helped drive the leveraged buyout business; banks like Citi had “no credibility to stop participating in this lending business . . . My belief then and my belief now is that one firm in this business cannot unilaterally withdraw from the business and maintain its ability to conduct business in the future.” 23 He believed that “if you are not engaged in business, people leave the institution, so it is impossible to say in my view to your bankers we are just not going to participate in the business in the next year or so
——— What are your thoughts on Omron’s future sys- tem of corporategovernance?
Omron’s founder used to be the heart and unifying force of the Company, and the role was subsequently taken over by his family. However, in fiscal 2003 a person not related to the Tateisi family was appointed president for the first time. This was followed by the gradual devolution of author- ity and rapid globalization of the Company. As a result, overseas employees came to comprise two-thirds of Omron’s total workforce. These changes have contributed to a diversification in values within the Omron Group. Amid such transformation, Yoshio Tateisi, who is Representative Director and Chairman, declared on May 10, 2006 (on the occasion of the Company’s anniversary) that in order to establish steadfast corporategovernance, “Omron’s heart and unifying force should be transferred from its founder and founding family to the Omron Principles.” Since then, we have endeavored to enhance corporategovernance with the Omron Principles as the heart and unifying force of the Omron Group.
Risk, ethics, regulation and other factors are inter-related and inter-dependent. Connectivity increases exposure to cyber risks (Clinton, 2014). Manufacturers of mobile and internet-of-things devices need to take responsibility for reducing the risk of their connected products being misused. Many users of the appliances, devices and other products they produce just opt for standard manufacturer passwords which are known to hackers. Responsible manufactures should ensure their customers are made aware of the risks involved. The UK Government's Department for Business, Energy and Industrial Strategy (2017) is considering ways in which boards might better engage with customers and employees. Should some risk managers also do more to engage with the risk concerns of a wider range of stakeholders, and in particular to observe and experience the lives of customers? An exposure to their needs and how different corporate responses would benefit them could help risk practitioners to develop a wider perspective and greater understanding of the rationale for incurring risk.