Saturday, February 6, 2010
Thoughts on Corporate Governance and Financial Crisis by Kabigting - Earl Malvar
Encompassing regulatory policies conferred to industries and individual companies set limits on how businesses and going concerns can be conducted. Interestingly enough, it is an implied direction for an organization to ‘push’ its resources to the limits in order to maximize investor returns and value. Without external monitoring and policing from appropriate authorities, unbridled or irresponsible conduct in the pursuit of organizational goals can lead to undesirable consequences, catastrophic in fact to the public realm if the industry/company is critically integrated and hugely involved in the direction of an economy/society. With the pace of globalization, economies are becoming increasingly integrated and interdependent on one another that an economy’s crisis is sure to hit the others in one way or another. In my opinion, corporate governance may be interpreted as a delicate cross between the essence of legalities and justice and of moral conduct and corporate responsibility. Corporate governance is the internal conscience that gives character and integrity to otherwise hollow organizations formed and known as corporations under the operations of the law. If laws and regulation passed down by those empowered in public service give the clear delineation between what is allowable and illegal, corporate governance heeds the call for self-restraint and caution in the conduct of business and commerce. It is my impression that corporate governance cannot be successfully executed without the clear comprehension, empathy, coordination and the synthesized undertaking of all stakeholders in a company. It is a case of the chain being only as strong as its weakest link. In any case, the extent of effectiveness and sense of security that corporate governance provides is only as good as what internal policies and subsequent results in profitability and growth purport it to be. In a sense, it could be said that the saying “if the wheel isn’t broken, then don’t fix it,” vastly applies in how companies are run. Retrospection and the instilling of internal rules become most apparent when the damage has already been done. Proactive revisions and ‘nurturing’ of corporate governance may be the next step towards developing management foresight and innovation.