Bpp learning Media is an acca approved Content Provider

 
(a) 
Increasing internationalisation and globalisation 
meant that investors, and institutional investors 
in particular, began to invest outside their home countries.
(b) The 
differential treatment of domestic and foreign investors
, both in terms of reporting and 
associated rights/dividends, caused many investors to call for parity of treatment.
BPP Tutor Toolkit Copy

---

PART B: BUSINESS ORGANISATION STRUCTURE, FUNCTIONS AND GOVERNANCE 
 
182
 
(c) Issues 
concerning 
financial reporting
were raised by many investors and were the focus of much 
debate and litigation. Shareholder confidence in many instances was eroded and, while focus 
solely on accounting and reporting issues is inadequate, the regulation of practices such as off-
balance sheet financing has led to greater transparency and a reduction in risks faced by 
investors.
(d) 
The characteristics of individual countries may have a 
significant influence
in the way corporate 
governance has developed. The King report emphasises the importance of qualities that are 
fundamental to the South African culture such as collectiveness, consensus, helpfulness, fairness, 
consultation and religious faith in the development of best practice. (Note that you will not be 
examined on individual reports.) 
(e) 
An increasing number of 
high profile corporate scandals
and collapses prompted the 
development of governance codes in the early 1990s. However, scandals since then have raised 
questions about further measures that may be necessary. 
2.2 Features of poor corporate governance 
The scandals over the last 25 years have highlighted the need for guidance in order to tackle the various 
risks and problems that can arise in organisations' systems of governance. 
2.2.1 Domination by a single individual
A feature of many corporate governance scandals has been boards dominated by a single senior 
executive, with other board members merely acting as a rubber stamp. Sometimes the single individual 
may bypass the board to action their own interests.
Even if an organisation is not dominated by a single individual, there may be other weaknesses. The 
organisation may be run by a small group centred round the chief executive and chief financial officer, 
and appointments may be made by personal recommendation rather than a formal, objective process.
2.2.2 Lack of involvement of board 
Boards that meet irregularly or fail to consider systematically the organisation's activities and risks are 
clearly weak. Sometimes the failure to carry out proper oversight is due to a