Disclosure is expected to reduce the information asymmetry between management and owner of companies (shareholders). Information asymmetry refers to a condition in which a manager (agent) has more information regarding the company than a shareholder (principal) does. Jensen and Meckling (1976) emphasize the importance of company owners (principal) handing over the management of the company to professionals (agent) who understand how to run a business. This condition results in information asymmetry between manager (agent) and shareholder (principal).
Coller and Gregory (1999) state that if it were associated with disclosure, a large board of commissioners would have greater power to pressure management into disclosing more information regarding
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Vafeas (2003) states that the number of meetings held by the board of commissioners will improve the company's performance and disclosure. Board of commissioners meeting is one of the intensive spaces to direct, monitor, and evaluate the implementation of the bank's strategic policy in accordance with article 9 of PBI Number: 8/14/PBI/2006. Regular and weighted meetings of the board of commissioners are able to add value to the company, including increasing the financial risk …show more content…
The companies will consider risk disclosure as a method to enhance the company's reputation through disclosure systematic. This is conducted based on the assumption that a greater level of visibility by the public implying a stricter supervision of stakeholders (Amran et al., 2009). According to Dalton et al. (1999), board size with an optimum size is more effective when the size is small. Moreover, Suhardjanto and Dewi (2011) suggest that the size of the board of commissioners has a positive effect on the level of risk disclosure.
H1: The size of board of commissioners has a positive effect on financial risk disclosure.
Board of commissioners as the culmination of the company's internal management system has a role to supervise activities (Siallagan & Machfoedz, 2006). In addition, Abeysekera (2010) states that the existence of independent commissioners will enhance the reputation as associated with more effective controls and thus to significantly affect the level of compliance of company information disclosure. The same results were also proven in a study conducted by Abraham and Cox (2007).
H2: The proportion of independent commissioners has a positive effect on financial risk
SOX at its core was meant to increase the disclosure requirements of publicly traded firms. In addition, SOX increased the role of independent directors in corporate governance, expanded the liability of officers and directors, required companies to assess and disclose the adequacy ...
On Monday, April 13th, 2009, I visited the Culver City city council meeting, and found that they operate using a council-manager form of government. For a city with a population of about 38,000, this type of governmental structure is fairly common, and I was not surprised to see it in action in a community where the median household income is around $56,000 a year. Culver City is also a culturally rich community with a 60 percent Caucasian population, and a quarter of the residents are either of African American or Asian decent. The mayor, D. Scott Malsin, is one of five members on the council, and his term as mayor is on a rotating basis. Having been to a Hermosa Beach city council meeting with a similar council-manager structure, I knew what to expect.
The Phoenix City Council meeting stood packed with attendees ranging from council men and women, lawyers, (basically elderly) interested citizens, neighborhood representatives, owners of businesses, and many others firm on playing a undeviating role in the due process of local government. The meeting began with an invocation from the pastor of a local church invited to pray by the Mayor Stanton. Then following was a pledge to the flag and then the mayor carries the motion. The Mayor reads for the council while passing them several agendas. This series of formalities set the tone for the arrangement and flow of the summit as a whole. Things steered quickly and professionally thanks to the succinct language of both the City Clerk and the Mayor, who led the agenda of the assembly. In general, each agenda entry was introduced by the Clerk, and then led through the agenda by Mayor, who asked for each item’s approval by the Council. The executive order of the agenda acted mostly as a general guideline, as the meeting swerved from the stated order with relative occurrence. Instead of a stringent order, the items seemed to be litigated first, in terms of how straightforwardly they might be permitted. Entire swathes of application were approved if the Council did not obtain any requests for dialogue concerning the item, and if the Council was expected to endorse the item unanimously. In theory, most of these items had already been hashed out in the various other committees through which any agenda item must pass before reaching the City Council.
To require the disclosure of meaningful information about a security and its issuer to allow investors to make intelligent investment decisions.
The Dahlonega City Hall was crowded on the evening of March 1st 2010. The seats were full, except for at the very front, and the standing room was filled almost out the door. The crowd, mostly made up of students, leaned in to hear as the voices of the City Council members faded in and out of the faltering sound system. The six City Council members and the mayor sat along a bench as if they were the judges at a hearing. Because of the ongoing discussions and the crowd, I thought I had arrived a few minutes late; but I was able to find a seat in the front two rows. Despite how packed the small room was there were plenty of empty seats in the front. I had thought the meeting was well on its way by the way conversation was going and apparently I was not the only one who shared this feeling. After a solid forty-five minutes of talking about parking laws and if there was a parking problem in the city, the mayor stood up and thanked everyone for coming. Most people took this as a sign that the meeting was over and started to pack up and leave. However this was just the meetings call to order. Following a prayer and the Pledge of Allegiance the City Council meeting began.
The Board of Directors shall meet prior to and following the General Business Meeting. Special meetings may be called by the President and must be called upon written request of at least two Members of the Board of Directors. Three Members of the Board of Directors shall constitute a quorum at any meeting of the Board of Directors. Meetings and votes may be conducted by phone or other electronic means as long as a quorum of the Board is present.
This separation between ownership and managerial control in this instance can be problematic as the principal and the agents have different interests and goals. In a large publicly traded corporation such as NOL/APL, shareholders (principals) lack direct control when the CEOs (agents) make decisions t...
Schofield (2014) researches the difference between public and private company financial reporting. For instance, a private company has fewer consumers reviewing their financial statements, whereas public companies could have multiple consumers reviewing financial statements. In addition, private companies typically have less specialized accounting personnel, whereas public companies will have several. Lastly, Schofield (2014), reviewed the number of amendments proposed and finalized to help benefit private companies financial reporting.
middle of paper ... ... People argue that insider information can cause an unfair disadvantage for the smaller investors, but I believe fairness only exists in someone’s fairy tale land. The markets will always be unbalanced. Some market participants have faster computers, better algorithms, smarter staff and work for businesses that transact with investment banks that will offer favorable allocations in Initial Public Offering’s because they are better clients.
Board of Directors The cornerstone of a successful community association is a healthy and effective Board of Directors that comfortably figures out its role and follows it with exceptional conviction and determination. The creation of a competent board requires intelligence and far sightedness from the directors, on all aspects of the company, whether it is its historical background or its current features including the strengths, weaknesses, opportunities and threats. It is the duty of the association to make sure that its operating procedures are in conformity with the regional as well as the federal laws of the state and also the administrative documents, which serve as the bedrock on which the edifice of the union is laid. The Board of
Organizations that only have top management as the board members are more susceptible to accounting malpractices. Members of the board should preferably own shares in the company to ensure diligence when it comes to the interests of the company. Apart from the Board of Governors, there should also be an audit committee in place to oversee the financial dealings of the bank. Members of the board and the audit committee should have basic financial knowledge. Some of the members should also be experts in finances so that they can detect any anomaly that may take place in terms of financial reporting. An overhaul of the regulatory framework is required to empower authorities to intervene immediately, and make improvements. New technology is required. Manual antiquated processes should be eliminated because this causes greater human error and poor
Conflict of interest is a big problem between Enron and its auditing firms. It is believes that Enron’s auditors was hide many information and external auditors never aware or hide the losses in Enron. From audit committees to transparency committees would increase the likelihood that a firm’s key business ricks are transparent to investors (Healy & Palepu 2003, p. 21). Besides, a transparency committee can also help with internal auditor appreciate its primary responsibility lies with the board, not for personal interest and pleasing the leader.
The oversight responsibilities of the board, the CAE lacking of expertise or broad understanding of financial controls and responsibilities, and the understaffed internal audit functions lacking of independence and direct access to the board of directors contributed to the absence of internal controls. To begin with, the board should be retrained to achieve financial literacy to review financial reporting. Other than attending formal meetings, the board of directors should be more involved with the management. For the Audit Committee, the two members who were recruited as acquaintances to Brennahan need be replaced with experts who are more sufficiently knowledgeable about accounting rules beyond merely “financially literate”. Furthermore, the internal audit functions need to expand with different expertise commensurate with the expanded activities of the organization, testing financial reporting rather than internal controls from an operational perspective. The CAE should be more independent and proactive to execute audit plans, instead of following orders from the CFO, and initiate a direct and efficient communication between internal audit and audit
This shows how a lack of transparency in reporting of financial statements leads to the destruction of a company. This all happened under the watchful eye of an auditor, Arthur Andersen. After this scandal, the Sarbanes-Oxley Act was changed to keep into account the role of the auditors and how they can help in preventing such
On Monday,October 14, 2013 at 7:00 P.M., I attended the Bradford Area School District school board meeting at Floyd C. Fretz Middle School in the large group instruction room. This meeting was important for the teachers, students, and the schools in the district. It provided information that correlated to the material in class and a perspective on what situations as a future teacher I may experience.