This document summarizes recommendations for improving corporate governance in the wake of the Enron scandal and the subsequent legal responses in the US and UK. There are differing views between supporters of the stakeholder model versus the shareholder model. Recommendations that find broad support include: (1) providing more training and professional development for board members; (2) conducting industry-sponsored research on best practices; and (3) requiring companies to publish codes of ethics. The US responded through laws like the Sarbanes-Oxley Act that aimed to increase management accountability and disclosure of transactions. The UK issued reports like the Higgs Report that recommended improving board independence and transparency.
International Journal of Business and Management Invention (IJBMI)inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
The Journal will bring together leading researchers, engineers and scientists in the domain of interest from around the world. Topics of interest for submission include, but are not limited to
Principles of Corporate Governance and Ethics for Sustainable Businessinventionjournals
This theoretical paper examines the importance of corporate governance and business ethics that impact organizations and individuals. In the aftermath of the public embarrassment of corporate malfeasance, organizations should underpin their policies and regulations to overcome numerous ethical issues and to ensure the well-being of all. Further, corporate governance is concerned with the ownership, control and accountability of organizations, and how the corporate pursuit of economic objectives relates to a number of wider ethical and societal considerations. Thus, this paper presents an adoption of proper governance practices and business ethics standards, and discusses the importance of such an approach in analyzing and understanding corporate governance practices. Many studies have discovered that an integrated approach towards corporate governance and business ethics should help organizations implement high standards of ethical behavior throughout the organization. In general, the prominence of such a holistic approach, by integrating several components, is the precondition of better understanding of corporate governance practices and procedures to enhance ethical behavior in organizations.
Article: Influence of Corporate Board Characteristics on Firm Performance of ...McRey Banderlipe II
Using disclosure information from 29 listed property companies in the Philippines, the results revealed that managerial ownership positively influences firm performance. Moreover, firm size, leverage, and age influence the accounting-based measures of performance to a great extent than the market-based measures. Further research should focus on the overall impact of corporate governance using different measures of performance to better assist the decision making of the company’s stakeholders.
The corporate governance is a popular topic within two last decade, and the emerging economies are practicing &enhancing their performances. The review is conducted to assess the effectiveness of the corporate governance implications on firm’s performances. The study followed the deductive approach and the journal articles, and the reports have used the source of the review. As per the literature findings, the researcher developed a conceptual design for the case review. The independent variable is the corporate governance mechanism, and the dependent variable is organizations performances. Both independent and dependent variables comprise the different type of corporate governance practice and the different function of the organizational performances. The review found that all the types of corporate governance practices are influenced to the organizational performance and the better corporate governance mechanism can enhance all type of performances.
Investigating Corporate Governance And Its Effect on Firm Performance with As...QUESTJOURNAL
ABSTRACT: Corporate governance and its effect on firm performance are investigated in this research. Research independent variables include non-bound members of board of directors, board of directors’ independence, institutional shareholders, and dependent variable includes assets return which is the index of firm’s performance. Accordingly, data of 125 accepted firms in Tehran securities exchange during 2009 to 2013 was extracted and panel data regression model was applied to test the hypotheses. Results indicate an inverse significant relationship between non-bound members of board of directors and assets return and a positive significant relationship between board of directors’ independence and firm’s performance. Also, there is a positive relationship between institutional shareholders and firm’s performance. In general, results showed that appropriate corporate governance improves firms’ performance.
International Journal of Business and Management Invention (IJBMI)inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
The Journal will bring together leading researchers, engineers and scientists in the domain of interest from around the world. Topics of interest for submission include, but are not limited to
Principles of Corporate Governance and Ethics for Sustainable Businessinventionjournals
This theoretical paper examines the importance of corporate governance and business ethics that impact organizations and individuals. In the aftermath of the public embarrassment of corporate malfeasance, organizations should underpin their policies and regulations to overcome numerous ethical issues and to ensure the well-being of all. Further, corporate governance is concerned with the ownership, control and accountability of organizations, and how the corporate pursuit of economic objectives relates to a number of wider ethical and societal considerations. Thus, this paper presents an adoption of proper governance practices and business ethics standards, and discusses the importance of such an approach in analyzing and understanding corporate governance practices. Many studies have discovered that an integrated approach towards corporate governance and business ethics should help organizations implement high standards of ethical behavior throughout the organization. In general, the prominence of such a holistic approach, by integrating several components, is the precondition of better understanding of corporate governance practices and procedures to enhance ethical behavior in organizations.
Article: Influence of Corporate Board Characteristics on Firm Performance of ...McRey Banderlipe II
Using disclosure information from 29 listed property companies in the Philippines, the results revealed that managerial ownership positively influences firm performance. Moreover, firm size, leverage, and age influence the accounting-based measures of performance to a great extent than the market-based measures. Further research should focus on the overall impact of corporate governance using different measures of performance to better assist the decision making of the company’s stakeholders.
The corporate governance is a popular topic within two last decade, and the emerging economies are practicing &enhancing their performances. The review is conducted to assess the effectiveness of the corporate governance implications on firm’s performances. The study followed the deductive approach and the journal articles, and the reports have used the source of the review. As per the literature findings, the researcher developed a conceptual design for the case review. The independent variable is the corporate governance mechanism, and the dependent variable is organizations performances. Both independent and dependent variables comprise the different type of corporate governance practice and the different function of the organizational performances. The review found that all the types of corporate governance practices are influenced to the organizational performance and the better corporate governance mechanism can enhance all type of performances.
Investigating Corporate Governance And Its Effect on Firm Performance with As...QUESTJOURNAL
ABSTRACT: Corporate governance and its effect on firm performance are investigated in this research. Research independent variables include non-bound members of board of directors, board of directors’ independence, institutional shareholders, and dependent variable includes assets return which is the index of firm’s performance. Accordingly, data of 125 accepted firms in Tehran securities exchange during 2009 to 2013 was extracted and panel data regression model was applied to test the hypotheses. Results indicate an inverse significant relationship between non-bound members of board of directors and assets return and a positive significant relationship between board of directors’ independence and firm’s performance. Also, there is a positive relationship between institutional shareholders and firm’s performance. In general, results showed that appropriate corporate governance improves firms’ performance.
Presentation provides an overview of the theoretical concepts in corporate governance, few definitions, methods to measure it and a brief overview of recent developments in corporate governance in the Caribbean.
Impact of corporate governance on firm performance publishedMuhammad Usman
In the light of corporate financial scandals, there is an increasing attention on corporate governance issues. The investors look for emerging economies to diversify their investment portfolios to exhaust the possibilities of returns. This paper examines the impact of corporate governance variables on firms’ performance. This Research found that there is a direct positive relationship between profitability measured either by Earnings per share (EPS) or Return on assets (ROA) and corporate governance, also have a positive direct relationship between each of liquidity, dividend per share, and the size of the company with corporate governance, finally the study found a positive direct relationship between corporate governance and corporate performance. Various studies have been conducted in developing countries including Pakistan to investigate the relationship among corporate governance and firm performance. This study indicates that corporate governance can be measured through the following elements.
(1) board size (2) Female Member (3) CEO duality (4) Education of Directors (5) Board working experience(6) independent directors (7) board compensation (8) Board ownership (9) Audit committee (10) Board composition(11)Leadership Structure
Brennan, Niamh M. [2010] “A Review of Corporate Governance Research: An Irish...Prof Niamh M. Brennan
An overview of corporate governance is provided in this chapter, commencing with a discussion of alternative definitions of governance. Internal and external mechanisms of governance are described. The role of boards of directors, and theories explaining those roles, are also considered. In order to provide some insights into governance research, 15 academic papers with an Irish angle were selected for analysis, by reference to theoretical perspective, governance mechanism studied, research method adopted and results. The analytical table demonstrates the variety of research conducted. Some concluding comments are then drawn.
Brennan, Niamh M. [2008] “Introduction. Corporate Governance and Financial Re...Prof Niamh M. Brennan
Corporate governance is the subject of a burgeoning literature. Accordingly it is impossible to summarise an entire field in a book of readings. For this reason, I have focused this selection of readings on the financial reporting aspects of corporate governance, which marries two of my research interests. Given the speed of change in the area of corporate governance, generally-speaking the volume of readings is skewed towards more recent publications. However, some seminal material is included from which a considerable amount of corporate governance empirical research was derived, especially Jensen and Meckling (1976), Fama & Jensen (1983) and Jensen (1993). Denis (2001) suggests that the groundswell for research on corporate governance by financial economists stated with Jensen and Meckling’s (1976) paper on the theory of the firm and featuring agency theory.
This is a focussed interdisciplinary compilation of readings which brings together corporate governance and financial reporting, and issues of accountability. It does not comprise a broad coverage of all corporate governance issues. Instead, it takes a narrower perspective, concentrating only on those corporate governance mechanisms influencing financial reporting and accountability.
“Ensuring Competitive Advantage and Sustainability: an Overview of Obligation...inventionjournals
Corporate Governance is a buzz word in the field of economic administration, regulatory framework and behavioral sciences. The subject of corporate governance has its relevance and significance to varied stakeholders in different ways. In fact, Corporate Governance is a form of obligation, which a corporate body has towards shareholders, employees, customers, Government, Public and towards the Society. Organizations, which are known for good governance by fulfilling all these obligations with a proper blend, are the lead players for the others to follow for securing better and effective competitive advantage. Keeping in mind these varied obligations, Organizations and corporate bodies regularly updating their policies and practices especially for continued competitive advantage but the process of updating is not so easy, they have to find it in a pro-active manner to withstand in the market. The present research paper with this in view aimed at understanding the framework of corporate governance and its role in securing better and effective competitive advantage from the ambit of various stakeholders with a broader consideration from the angle and obligation of Sustainability and Corporate Social Responsibility. Further, the study remarked the changing nature obligations for existence of corporate bodies under dynamic environment. The research paper also differentiated the gap between theory and practice in adoption of sustainability practices. Finally, the research paper ends with some suggestions and ways for better and good governance for organizational sustainability.
The Impact of Corporate Governance on Improving Overall Performance of the Co...CSCJournals
Corporate governance is recognized as one of the most important implications in building marketplace confidence. The study will assess the level of implementation of corporate governance and level of performance in seven companies from different industries in some countries. We selected seven companies (Audi Bank, Nestlé Group, Dana Gas, Medgulf, Coca Cola, SABIS, Al Baraka Banking Group) which operate in different sectors (Banking, Food and beverages, Energy, Insurance, Education, and Islamic Banking).
The result of the study shows that there is a significant relationship between corporate governance practices and companies' performance. It is expected that the findings of this research paper would contribute to improve understanding about corporate governance practices and their impacts on improving overall performance of the companies.
Results of the study shows that through appropriate application of the standards of corporate governance companies increase profitability, effectiveness and efficiency, improve their credibility, sustainability, transparency, disclosure, reputation, competitiveness and quality in all aspects and enhance management control, risk management, financial management, oversight and relations with key stakeholders such as investors, business partners, employees, customers, etc.
The study recommends that companies should implement corporate governance principles and standards in their strategy and decision making process. They should focus on board of directors, committee structure, risk management, internal audit, external audit, internal control, human capital, sustainability, social responsibility, financial management, disclosure, transparency and the rights of shareholders.
Article: The Impact of Selected Corporate Governance Variables in Mitigating ...McRey Banderlipe II
This study attempts to explain the role of selected corporate governance variables related to a company's board of directors in mitigating earnings management in the country. The findings revealed that the holding of multiple directorial positions by the independent directors, and the managerial ownership of the board are significant enough to limit the incentives for earnings management.
Corporate Governance - A Broader Perspectiveiosrjce
In this paper it is argued that the notion of market-based corporate governance approach should be
broadened to include the problem of owner-controlled firms and large block-holders and should be generalized
to a model of multilateral negotiations and influence-seeking among a number of different stakeholders. In
practice such a model should incorporate checks and balances between various stakeholders and outside
constraints and must take into account how the political and legal system of a country affects this balance. In
fact, even if there is theoretical reason to believe that ownership with its incumbent benefits and costs belongs
to equity, this view is not dominant in most economies outside United Kingdom and United States of America.
The broader notion of corporate governance offers hope for understanding better the developing economies in
particular - and other economies in general - where anonymous stock markets are not likely to promote the
necessary entrepreneurial activity and corporate restructuring. It suggests that other mechanisms, such as
product market competition, peer pressure, or labor market activity, may compensate for this weakness, or more
realistically, may be more promising targets for legal or political reform than the stock market.
Presentation provides an overview of the theoretical concepts in corporate governance, few definitions, methods to measure it and a brief overview of recent developments in corporate governance in the Caribbean.
Impact of corporate governance on firm performance publishedMuhammad Usman
In the light of corporate financial scandals, there is an increasing attention on corporate governance issues. The investors look for emerging economies to diversify their investment portfolios to exhaust the possibilities of returns. This paper examines the impact of corporate governance variables on firms’ performance. This Research found that there is a direct positive relationship between profitability measured either by Earnings per share (EPS) or Return on assets (ROA) and corporate governance, also have a positive direct relationship between each of liquidity, dividend per share, and the size of the company with corporate governance, finally the study found a positive direct relationship between corporate governance and corporate performance. Various studies have been conducted in developing countries including Pakistan to investigate the relationship among corporate governance and firm performance. This study indicates that corporate governance can be measured through the following elements.
(1) board size (2) Female Member (3) CEO duality (4) Education of Directors (5) Board working experience(6) independent directors (7) board compensation (8) Board ownership (9) Audit committee (10) Board composition(11)Leadership Structure
Brennan, Niamh M. [2010] “A Review of Corporate Governance Research: An Irish...Prof Niamh M. Brennan
An overview of corporate governance is provided in this chapter, commencing with a discussion of alternative definitions of governance. Internal and external mechanisms of governance are described. The role of boards of directors, and theories explaining those roles, are also considered. In order to provide some insights into governance research, 15 academic papers with an Irish angle were selected for analysis, by reference to theoretical perspective, governance mechanism studied, research method adopted and results. The analytical table demonstrates the variety of research conducted. Some concluding comments are then drawn.
Brennan, Niamh M. [2008] “Introduction. Corporate Governance and Financial Re...Prof Niamh M. Brennan
Corporate governance is the subject of a burgeoning literature. Accordingly it is impossible to summarise an entire field in a book of readings. For this reason, I have focused this selection of readings on the financial reporting aspects of corporate governance, which marries two of my research interests. Given the speed of change in the area of corporate governance, generally-speaking the volume of readings is skewed towards more recent publications. However, some seminal material is included from which a considerable amount of corporate governance empirical research was derived, especially Jensen and Meckling (1976), Fama & Jensen (1983) and Jensen (1993). Denis (2001) suggests that the groundswell for research on corporate governance by financial economists stated with Jensen and Meckling’s (1976) paper on the theory of the firm and featuring agency theory.
This is a focussed interdisciplinary compilation of readings which brings together corporate governance and financial reporting, and issues of accountability. It does not comprise a broad coverage of all corporate governance issues. Instead, it takes a narrower perspective, concentrating only on those corporate governance mechanisms influencing financial reporting and accountability.
“Ensuring Competitive Advantage and Sustainability: an Overview of Obligation...inventionjournals
Corporate Governance is a buzz word in the field of economic administration, regulatory framework and behavioral sciences. The subject of corporate governance has its relevance and significance to varied stakeholders in different ways. In fact, Corporate Governance is a form of obligation, which a corporate body has towards shareholders, employees, customers, Government, Public and towards the Society. Organizations, which are known for good governance by fulfilling all these obligations with a proper blend, are the lead players for the others to follow for securing better and effective competitive advantage. Keeping in mind these varied obligations, Organizations and corporate bodies regularly updating their policies and practices especially for continued competitive advantage but the process of updating is not so easy, they have to find it in a pro-active manner to withstand in the market. The present research paper with this in view aimed at understanding the framework of corporate governance and its role in securing better and effective competitive advantage from the ambit of various stakeholders with a broader consideration from the angle and obligation of Sustainability and Corporate Social Responsibility. Further, the study remarked the changing nature obligations for existence of corporate bodies under dynamic environment. The research paper also differentiated the gap between theory and practice in adoption of sustainability practices. Finally, the research paper ends with some suggestions and ways for better and good governance for organizational sustainability.
The Impact of Corporate Governance on Improving Overall Performance of the Co...CSCJournals
Corporate governance is recognized as one of the most important implications in building marketplace confidence. The study will assess the level of implementation of corporate governance and level of performance in seven companies from different industries in some countries. We selected seven companies (Audi Bank, Nestlé Group, Dana Gas, Medgulf, Coca Cola, SABIS, Al Baraka Banking Group) which operate in different sectors (Banking, Food and beverages, Energy, Insurance, Education, and Islamic Banking).
The result of the study shows that there is a significant relationship between corporate governance practices and companies' performance. It is expected that the findings of this research paper would contribute to improve understanding about corporate governance practices and their impacts on improving overall performance of the companies.
Results of the study shows that through appropriate application of the standards of corporate governance companies increase profitability, effectiveness and efficiency, improve their credibility, sustainability, transparency, disclosure, reputation, competitiveness and quality in all aspects and enhance management control, risk management, financial management, oversight and relations with key stakeholders such as investors, business partners, employees, customers, etc.
The study recommends that companies should implement corporate governance principles and standards in their strategy and decision making process. They should focus on board of directors, committee structure, risk management, internal audit, external audit, internal control, human capital, sustainability, social responsibility, financial management, disclosure, transparency and the rights of shareholders.
Article: The Impact of Selected Corporate Governance Variables in Mitigating ...McRey Banderlipe II
This study attempts to explain the role of selected corporate governance variables related to a company's board of directors in mitigating earnings management in the country. The findings revealed that the holding of multiple directorial positions by the independent directors, and the managerial ownership of the board are significant enough to limit the incentives for earnings management.
Corporate Governance - A Broader Perspectiveiosrjce
In this paper it is argued that the notion of market-based corporate governance approach should be
broadened to include the problem of owner-controlled firms and large block-holders and should be generalized
to a model of multilateral negotiations and influence-seeking among a number of different stakeholders. In
practice such a model should incorporate checks and balances between various stakeholders and outside
constraints and must take into account how the political and legal system of a country affects this balance. In
fact, even if there is theoretical reason to believe that ownership with its incumbent benefits and costs belongs
to equity, this view is not dominant in most economies outside United Kingdom and United States of America.
The broader notion of corporate governance offers hope for understanding better the developing economies in
particular - and other economies in general - where anonymous stock markets are not likely to promote the
necessary entrepreneurial activity and corporate restructuring. It suggests that other mechanisms, such as
product market competition, peer pressure, or labor market activity, may compensate for this weakness, or more
realistically, may be more promising targets for legal or political reform than the stock market.
r Academy of Management Journal2015, Vol. 1015, No. 1, 1–9..docxmakdul
r Academy of Management Journal
2015, Vol. 1015, No. 1, 1–9.
http://dx.doi.org/10.5465/amj.2014.4006
FROM THE EDITORS
RETHINKING GOVERNANCE IN MANAGEMENT RESEARCH
In the field of management, the study of gover-
nance has primarily dealt with decision-making by
boards of directors, chief executives, and senior
managers. The corporate governance literature has
generated important insights regarding incentive
alignment, risk taking, and coordination chal-
lenges. Emerging trends, highlighted in this issue,
raise new questions regarding managerial roles,
organizational contexts, internal and social pro-
cesses, and changes in governance over time. We
encourage management scholars to rethink their
approach to governance research by considering
stakeholder engagement, the implications of big
data, social impact, global dimensions, and com-
parative analysis of governance. A broadened con-
ceptualization of governance may also deal with the
dynamics of interorganizational arrangements, in-
cluding the co-creation of organizations of varying
governance forms.
WHAT IS GOVERNANCE?
In this “thematic issue,” we assembled articles
that reflect evolving practices in governance.1
Corporate governance is the system by which
companies are directed and controlled. Boards of
directors are responsible for the governance of
their companies. The shareholders’ role in gover-
nance is to appoint the directors and the auditors
and to satisfy themselves that an appropriate gov-
ernance structure is in place. The responsibilities
of the board include setting the company’s strategic
aims, providing the leadership to put them into
effect, supervising the management of the business,
and reporting to shareholders on their stewardship.
The board’s actions are subject to laws, regulations,
and the shareholders in general meeting (Cadbury,
1992). Corporate governance is therefore about
what the board of a company does and how it sets
the values of the company, but is distinct from the
operational management of the company by full-
time executives.
These views of corporate governance stem pre-
dominantly from a financial perspective. For ex-
ample, Shleifer and Vishny (1997: 737) address
corporate governance as “the ways in which sup-
pliers of finance to corporations assure themselves
of getting a return on their investment. How do the
suppliers of finance get managers to return some
of the profits to them? How do they make sure
that managers do not steal the capital they supply
or invest it in bad projects? How do suppliers
of finance control managers?” These views stem
primarily from an agency theoretical perspective
that investigates the consequences of separation of
ownership and control in the modern corporation
(Jensen & Meckling, 1976). Recent corporate ac-
tivity and views, however, have an expanded view
of governance as involving stewardship and lead-
ership, in addition to the narrower financial pru-
dence role. From a survey of board members from
15 countri ...
Brennan, Niamh M. and Solomon, Jill [2008] Corporate Governance, Accountabili...Prof Niamh M. Brennan
Purpose – This paper reviews traditional corporate governance and accountability research, to suggest opportunities for future research in this field. The first part adopts an analytical frame of reference based on theory, accountability mechanisms, methodology, business sector/context, globalisation and time horizon. The second part of the paper locates the seven papers in the special issue in a framework of analysis showing how each one contributes to the field. The paper presents a frame of reference which may be used as a 'roadmap' for researchers to navigate their way through the prior literature and to position their work on the frontiers of corporate governance research.
Design/methodology/approach – The paper employs an analytical framework, and is primarily discursive and conceptual.
Findings – The paper encourages broader approaches to corporate governance and accountability research beyond the traditional and primarily quantitative approaches of prior research. Broader theoretical perspectives, methodological approaches, accountability mechanism, sectors/contexts, globalisation and time horizons are identified.
Research limitations/implications – Greater use of qualitative research methods are suggested, which present challenges particularly of access to the “black box” of corporate boardrooms.
Originality/value – Drawing on the analytical framework, and the papers in the special issue, the paper identifies opportunities for further research of accountability and corporate governance.
Ownership concentration, corporate governance and the firm's financial perfor...Santosh Pande
This contains the pre submission seminar presentation made by me in respect of my Ph D dissertation. Those interested in more details are welcome to email me at : spande@nihilent.com.
The Relationship between Board Tenure and Financial Performance. The Allegian...IJMREMJournal
PURPOSE: The purpose of this paper was to examine the relationship between the tenure of the board and
financial distress of listed firms in Kenya.
DESIGN/METHODOLOGY: The research design used in this study was exploratory design. The study employed
panel regression analysis and simultaneously used pooled regression and random effects on sample size of 57
listed firms in Kenya during the period of 2007-2016.
FINDINGS: The study found that board tenure was found to be negatively and significantly related to financial
performance (β=-0.091; p<0.01).
THEORETICAL IMPLICATIONS: This study adds value to theory by studying the effect of tenure on
financial performance by updating empirical literature from a developing country.
ORIGINALITY: The paper fills an important gap in academic literature by providing insights into the role of
board tenure in performance of firms particularly in developing economies. In addition, given the increasing
collapsing of companies in developing nations, this paper provides policy makers with evidence on the
implications of board composition on financial distress.
Impact of Firm Specific Factors on Capital Structure Decision: An Empirical S...Waqas Tariq
Abstract This study attempts to explore the impact of firm specific factors on capital structure decision for a sample of 39-firm listed on Dhaka Stock Exchange (DSE) during 2003-2007. To achieve the objectives, this study tests a null hypothesis that none of the firm’s specific factors namely profitability, tangibility, non-debt tax shield, growth opportunities, liquidity, earnings volatility, size, dividend payment, managerial ownership, and industry classification has significant impact on leverage using estimate of fixed effect model under Ordinary Least Square (OLS) regression. Checking multicollinearity and estimating regression analysis through Pearson correlation and autoregressive mode respectively this study found that profitability, tangibility, liquidity, and managerial ownership have significant and negative impact on leverage. Positive and significant impact of growth opportunity and non-debt tax shield on leverage has been found in this study. On the other hand size, earnings volatility, and dividend payment were not found to be significant explanatory variables of leverage. Results also reveal that total debt to total assets ratios are significantly different across Bangladeshi industries. Keywords: Capital structure, Leverage, Firm’s specific factors, Dhaka Stock Exchange Bangladesh.
Abstract
Corporate governance is very important in our business world today, especially after the frequent non-stop worldwide financial crises. Strong corporate governance is now considered a basic condition to accept and register an organization in most of the Stock Exchange Markets all over the world. The audit committee plays a major role in corporate governance regarding the organization’s direction, control, and accountability. As a representative of the board of directors and main part of the corporate governance mechanism, the audit committee is involved in the organization’s both internal and external audits, internal control, accounting and financial reporting, regulatory compliance, and risk management. This paper focuses on the audit committee’s powers, functions, responsibilities, and relationships within the framework of corporate governance.
The influence of managerial ownership,institutional ownership and voluntaryd...inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
An article Singapore corporate governance worse than in neighbo.docxSHIVA101531
An article "Singapore corporate governance worse than in neighbors Malaysia and Thailand more transparent than financial hub, study finds" references a study that assesses corporate governance areas covering business ethics, including internal and external commitments against corruption, as well as reporting and monitoring.
A key statement for students to consider, out of the article, is "
In Singapore companies -- and I'm not so sure how to put this -- there seems to be
a reticence, a reluctance, to make disclosures
".
The articles above makes uncomfortable reading, as it poses significant reputational damage.
For this assignment, put yourself in the position of being an external advisor or consultant, appointed by a medium sized, non-listed Singapore-owned company with regional manufacturing links. As part of this consultancy brief, you have been directed to investigate whether concepts of Corporate Social Responsibility may provide future direction.
Corporate Social Responsibility (CSR) is generally understood to mean that companies have a degree of responsibility not only for the economic consequences of their activities, but also for social and environmental implications.
Students are to write a researched report, reframing this situation through the perspective of Corporate Social Responsibility to set a higher order agenda for Corporate Governance.
In this report, devote thought and well-grounded arguments to the company, drawing on Stakeholder Salience.
Reflecting on the course, draw upon their learnings from this semester, the theories which have been discussed, to consider why Singapore companies seem to be reluctant to make disclosures. Identify the strengths and weakness of the different perspectives.
You should consider
How can organisations and specifically organisational boards be made more accountable (Schillemans and Bovens 2019)?
From accountability (Schillemans and Bovens 2019) and stakeholder (Freeman 2008; Mitchell et al 1997) perspectives what are the strengths and weaknesses of the extant governance models?
Drawing on course literature and concepts (for example Psaros 2008; Mitchell et al 1997; Boyd et al 2011; Morck, and Yeung, 2003; Young et al 2008) critically address these questions by interrogating literature on the following alternative governance models and structures (Government Business Enterprises (GBEs)/State Owned Enterprises (SOEs), cooperatives, unitary boards, dual tier boards/codetermination/Works Councils).
Your answer must discuss principles that might apply to all models and draw on the following literature: stakeholder value (Freeman 2008), Government Business Enterprises (GBEs) (Bovens 2019; Henderson & Clarke 2016), co-operatives (Erassti et al 2017; Cook 1995), and codetermination on boards & works councils/dual boards (Jackson & Muellenborn 2012; Frege 2005, 2002; Hertig 2006).
.
Running Head FOUR-FRAME MODEL 1FOUR-FRAME MODEL7Fou.docxcowinhelen
Running Head: FOUR-FRAME MODEL
1
FOUR-FRAME MODEL
7
Four Frame Model
Rubin Wilkins
Module 5 Assignment 2
Argosy University Los Angeles
Professor: Dale Mancini
February 15, 2017
Four-frame Model
Introduction
Bolman and Deal synthesized the foregoing leadership theory into four contemporary cognitive perspectives which they further organized into frames to assist leaders in the decision-making process in relation to each individual situation. It was their understanding that the use of such frames would assist leaders in analyzing respective events in a different manner and perspective. In essence, they provide ‘windows’ that enhance the leaders’ to have a broader understanding of the challenges being faced by the organization and solutions that are potentially available. This insightful piece therefore proceeds to help in understanding the frames.
The Four-Frame Model of leadership is a creation stemming from the meshing of various organizational theories to form a wide-encompassing one. These consolidated theories include; the trait theory, power and influence theory, situational and contingency theory, and the behavioral theory (Bateman, 2007). They have been developed over a span of many years. The multiple perspectives emanating from the various theoretical underpinnings are the ones termed as frames by the two theorists; through which an organization is viewed by the leaders and other related persons. These ‘windows’ further operate to bring an organization into focus and subsequently serve as filters which offer the leaders order and assist them in making decisions. Furthermore, the frames comprise of the structural frame, human resource frame, political frame and the symbolic frame. Each individual frame represents a perspective
accompanied by its own assumptions and attributes.
The structural frame is used in viewing the world from an orderly point of view furnished with a multiplicity of rules and procedures. The human resource frame then comes in to assume that goals are best achieved through the meeting of organization members’ needs and fully appreciating the workforce as fundamental part of the organization. The political frame appertains to the conflicts, alliances and bartering of respective parties to properly use and allocate the scares resources owned by and charged to the organization. Finally, symbolic frame relates to the issues of culture, symbols and rituals of an organization as opposed to the established rules and procedures.
Theme among articles
Song, Kim and Kolb (2009) set out to research on the effect of learning an organization’s culture and the established linkage between interpersonal trust and the general commitment to an organization. The sample used in this study was primarily obtained from various employees working to conglomerate entities of Korea. Resultantly, it was established that learning an organization’s culture worked as a mediating factor in the explanation of associations betwe ...
2. Corporate Governance Jan Zika1
Introduction
Between 1989 and 1995, Enron was named “America's Most Innovative Company” by
Fortune magazine. It won various awards for its corporate citizenship and environmental
policies. In 2000, it was also the seventh largest company in the United States, by market
capitalization. Despite that, the company filed for bankruptcy in 2001. Enron came to be
considered one of the biggest failures of corporate governance and to represent subsequent
similar scandals.
The facts of the case, and Enron’s business and its corporate governance structure, including
their changes over time are well described in many papers and articles (Palepu and Healy,
2003; Sridharan, Dickes and Caines, 2003; Gordon, 2002),1
books (McLean and Elkind,
2004) and even an Oscar-nominated documentary (Gibney, 2005). This paper therefore will
not examine the case itself, but rather will review how Enron, and subsequent large corporate
scandals, influenced current theories of corporate governance and shaped the new legal
framework.
There is a traditional dispute between the supporters of the stakeholder model and the
supporters of the shareholder model of corporate governance. Stakeholder model supporters
tend to view the Enron scandal as further proof of the unsustainability of the shareholder
approach.
In contrast, advocates of the shareholder model argue that Enron only illustrates the
importance of understanding the unique role of shareholders and of protecting their interests
by minimizing the management’s discretion stemming from the stakeholder approach.
1
Note the reference to the involvement of McKinsey and Company and the $2.6 billion exposure of J.P. Morgan
described in Sridharan, Dickes and Caines (2003).
3. Corporate Governance Jan Zika2
The first part of this paper examines the conflicting recommendations that arise from these
different theories, and summarizes other recommendations that have widespread support. The
second part briefly describes the legal response to Enron and subsequent cases. The situation
of the USA and the UK is presented in more detail as developments in these countries provide
the strongest, quickest and most illustrative examples.
4. Corporate Governance Jan Zika3
Recommendations
Sachs and Rühli (2005), in line with others, support the stakeholder view of a corporation and
point out that the shareholder perspective is too narrow to account for some aspects of
knowledge-oriented businesses. They criticize the current incentives for management based
on investors’ policies, and argue that such incentives do not consider the broader range of
constituencies. They conclude that managers may need to change their values in order to
better implement the stakeholder view in strategic thinking.
Sachs and Rühli (2005) hypothesize that the common feature of successful implementations
of the stakeholder approach to corporate governance is the focus on the knowledge
contribution of employees and their participation in the strategy creation process.
Also Tipgos and Keefe (2005) argue that employees must be recognized as key participants in
the corporate process, instead of being seen merely as a production factor. They see the
origins of the recent corporate scandals in the excessive power that is concentrated in the
hands of top management. They argue that a new and revolutionary approach to corporate
governance is needed; one that takes into account the current imbalance to prevent fraud in
the future. To reach this goal a comprehensive structure of corporate governance is needed.
Tipgos and Keefe (2005) see the core of this restructuring of corporate governance as the
empowerment of main constituencies—shareholders, directors, top management and
employees—through a shared vision of the goals and objectives of the corporation. The role
of the board in the new paradigm is to form and sustain a structure that ensures harmony and
cooperation between management and employees while they pursue the company’s goals and
objectives, as opposed to just officially authorizing management’s actions.
Ray (2005) sees a solution to the current problems of corporate governance in more
heterogeneous boards that are elected in a more democratic fashion. He stresses the
5. Corporate Governance Jan Zika4
importance of electoral competition and term limits. Furthermore, the board selection process
should be simple, and nominations should be allowed by senior management, existing board
members, employees and shareholders—employee nominations would require a petition
supported by some reasonable portion of the workforce.2
To justifying his theory that more democratic and more heterogeneous boards are the solution,
Ray (2005) makes two essential arguments. First, he asserts that homogeneous and self-
perpetuating boards are vulnerable to the negative outcomes of “group-think” and the
limitations of dominant corporate logic.3
Second, he argues that today’s corporations influence the lives of the general public through
their impact on environment, their ability to change consumption patterns, their global
operation, their employment practices etc., and thus, from the perspective of many who are
affected, the economic future of the society may be shaped by board directors, who are
nominated and elected without any formal process of representation or legitimacy.
However, there are opponents to the stakeholder approach. Norman (2004) criticizes
supporters of the strong corporate social responsibility theory.4
He asserts that shareholders
must be taken more seriously in the post-Enron era, and explains that shareholders have a
special position among other stakeholders due to the fact that the return on the capital they
provide to the company is not fixed. On the contrary, it depends on the performance of the
firm.
2
In industrial companies with a large unionized labor force, a union representative might be a candidate for a
board position, while in knowledge-based companies, employees could nominate independent candidates.
3
This is regardless of whether they are independent or not (the one of Enron, for example, was independent in
nominal sense).
4
Advocates of strong corporate social responsibility demand that top executives should work for the benefit of
all stakeholders even if this means reduction of profit and shareholder value. In other words, they see profit as a
necessary condition for sustainability of the business, but they argue that it cannot be more important than the
interests of other stakeholders.
6. Corporate Governance Jan Zika5
Norman (2004) emphasizes that shareholders are not intrinsically more important than other
stakeholders, because they “own” the firm, but rather, he says, they have a special position
due to the nature of the contractual relationship they have with firm. In other words,
shareholders’ interests are special based on corporate governance considerations, not based on
resource ownership, and due to their “unusual” contractual position and incentive structure,
shareholders are natural candidates to serve as the supervisors of managers who actually
control the company’s resources.
Reacting to the corruption scandals represented by Enron, Norman (2004) argues that new
ways of holding senior executives accountable in a stakeholder-oriented (multiple-objective)
firm must be found. He calls for reducing the discretion given to the managers in choosing
between profit maximization and multiple stakeholder benefits.
Norman (2004) alleges that the board of directors cannot effectively judge whether the top
management is doing a good job if it does not have a specific exclusive measurable target.
The standards for measuring improvement in some areas of stakeholder benefit are likely to
be flexible, if not ambiguous. Therefore, the board has to assume that management is deeply
committed to a corporate social responsibility mission. That, however, cannot be verified.
Moreover, accepting the existence of moral hazard, the corruption of agents is likely to
appear, in which case the program of multiple stakeholder benefits may become not only
inefficient, but fraudulent.5
Despite the seemingly contradictory viewpoints there are recommendations that find support
in both camps. Vinten (2003), for example, suggests that more attention be devoted to the
proper induction, training and development of board members. He criticizes the old-fashioned
5
Norman (2004) refers to the old finding of political philosophers when suggesting that the governance system
should not assume that it will be run by saints, but rather it needs to enable the board of directors to easily
distinguish incompetent or corrupt senior executives.
7. Corporate Governance Jan Zika6
view of directors who “were born not made” and asserts that directors should be mentored and
even certified and chartered through appropriate institutions.6
Along the same lines, Johnson (2002) calls for additional training to achieve a more
professional director role. He emphasizes that such professionalism should not create a class
of individuals who have the directorship as their sole occupation, but rather it should reflect a
process that educates directors to be effective shareholder representatives.7
In situations where board directors are ineffective, Johnson (2002) advises that institutional
investors find and nominate alternative candidates. He points out that if this approach is taken
by a sufficient portion of institutional investors, it could overcome current fears of changing
the established (bad) practices. Furthermore, the greater possibility of director replacement
could motivate nominating committees to try to find better candidates to begin with.
Another point of agreement seems to be the need for industry-sponsored research on corporate
governance. Vinten (2003) suggests that this is key to benchmarking good practice. Johnson
(2002) states that an interdisciplinary approach to corporate governance research could
identify, assess and evaluate:
- the impact of the investors’ investment horizon on a company’s success in creating
and maintaining value;
- the employee retention associated with the use of stock options versus restricted stock;
- the impact the amount of time a director’s stock ownership interests are locked up has
on his or her decisions;8
- the impact of term limits on the director’s responsiveness to shareholder interests;
6
He uses the Institute of Directors of the UK as an example.
7
Johnson (2002) presents National Association of Corporate Directors, Stanford Law School, State of Wisconsin
Investment Board, University of Wisconsin, Harvard University, University of Chicago, Wharton, TIAA-CREF
Institute, Kennesaw State University, University of Delaware Corporate Governance Center as examples of
institutions which already provide director training programs.
8
That is, whether they are in line with the interests of the shareholders or the interests of the management.
8. Corporate Governance Jan Zika7
- the impact of diversity of age, sex, race, income, and other factors on the effectiveness
of boards in particular industries;
- what approaches that tend to make a new or dissident director most effective;
- the relationship between shared CEO/chairmanship positions and corporate
governance failures;
- the effect of CEO compensation on CEO decisions and actions;
- whether directors are more effective if they regularly interact with shareholders;
- the implications of public disclosure of director votes on particular issues for board
decisions; and
- the implications of the existence of a competing candidate for a director’s position.
A last recommendation with relatively broad support concerns publishing codes of ethics.
Bernardi and LaCross (2005) surveyed a sample of 97 Fortune 500 companies in order to find
out to what extent they publish their codes of ethics. They discovered that since the fall of
Enron companies generally give increasing emphasis to the code of ethics, which can be seen
as a positive development. There were also no significant differences in the disclosure rates
between different industries. One surprising finding was that in 2002 none of the former
clients of Andersen revealed ethics policies on their websites and even in the following years
their level of disclosure was below the rest of the sample.
9. Corporate Governance Jan Zika8
Legal responses
Based on the theories that were outlined in the previous section, different authors came up
with specific recommendations to improve corporate governance and prevent failures such as
Enron from happening in the future. For example, Johnson (2002) mentions requirements that
directors own and continue to hold a significant amount of company shares during and after
their functional term, term limits, proxy reporting on the track record of a director at other
corporations where he or she also serves on the board, limits on the number of board posts a
single individual can hold, splitting the position of CEO and chairman, requiring an
independent director when the board performs any kind of self-evaluation, disclosure of
individual directors’ votes on important issues (e.g., executive compensation, option
expensing, appointment of auditors, merger decisions etc.), and finally adjusting director
compensation appropriately to the devoted time and efforts.
These and similar suggestions are often reflected in the discussion about new laws and in the
final legal framework itself. The collapse of Enron influenced policies related to corporate
governance in many countries, but the strongest and quickest reactions were in the USA and
the UK.
Morrison (2004) summarizes the main US legal responses. In the USA, corporate governance
is regulated by several authorities. Corporations are subject to federal legislation, SEC rules
and state laws. The most comprehensive reform of corporate governance law since the
Securities and Exchange Act of 1934 was the Sarbanes-Oxley Corporate Reform Act of 2002
(SOA).
As Morrison (2004) notes, SOA is not a new code of corporate governance, but rather a set of
statutory reforms concerning financial controls, auditing and accounting. In a nutshell, most
of the provisions of SOA concern the independence of members of the audit committee, a ban
10. Corporate Governance Jan Zika9
on auditors performing certain types of non-audit work, a revision of accounting standards for
debts of special purpose entities, the disclosure of off-balance sheet transactions and the
protection of so-called whistle-blowers.9
According to SOA, the CEO and the CFO must also certify annual reports, and may face
criminal penalties in cases of reckless certification. SOA also prohibits personal loans to
directors and disgorges incentive-based compensations and stock sales profits if accounts are
overstated. It also requires senior financial officers to disclose their corporate code of ethics.
The first requirement demands greater accountability of top management, as recommended by
stakeholder theorists, while the following two could be seen as revisions of the original
shareholder model.
SOA does not address the problem of independent board directors, per se. Neither does it
regulate equity-based compensation. These issues are however dealt with in the updated 2002
NYSE Listing Standards. According to which (1) the majority of the board should not have
any material relationship with the company; (2) directors must hold meetings without
managers present; (3) former employees of the company and its auditor must wait five years
before serving on the board; (4) the audit committee must have sole responsibility for hiring
the audit firm; (5) nominating and compensation committees must consist entirely of
independent directors; and (6) shareholders must approve all share-based compensation.
Dewing and Russell (2003) summarize the legal responses to Enron and similar scandals in
the UK. Long before Enron’s demise, the Cadbury Report of 1992 was the first ad hoc study
that reacted to the rising importance of corporate governance. Its findings were incorporated
in the so-called Combined Code.
9
Whistleblowers are generally people who reveal wrongdoing within a corporation to the public or to those in a
position of authority.
11. Corporate Governance Jan Zika10
In 2002, Derek Higgs was chosen by the UK government to review the role and effectiveness
of non-executive directors.10
The Higgs Report maintained the “comply or explain”
principle11
established by the Cadbury Report. Furthermore, it made over fifty
recommendations, of which Dewing and Russell (2003) consider the following as the most
controversial: (1) a senior independent director should be identified; (2) at least half of the
members of the board should be independent non-executive directors; (3) a chief executive of
the company should not become the chairman; (4) the roles of chairman and chief executive
should be strengthened; and (5) the senior independent director should attend a sufficient
number of the regular meetings of management with major shareholders to develop a
balanced understanding of the themes, issues and concerns of shareholders.12
These recommendations aimed to improve the board’s autonomy, make the decision making
process more transparent, and prevent conflicts of interest. One of the main criticisms was
that the constraint that half the board members be non-executive directors could prevent the
promotion of talented executives, and result in cumbersome boards and poorer company
performance.13
Critics also objected that the Higgs Report recommendations could result in the application a
one-size-fits-all template to companies that are in essence different. However, considering the
“comply or explain” principle maintained by the Higgs Report, this objection could be
10
The main issues considered by the Higgs Report included the role of the non-executive director, the chairman,
the board of directors and the senior independent director; independence; recruitment and appointment; induction
and professional development; tenure and time commitment; remuneration; resignation; audit and remuneration
committees; liability and finally relationships with shareholders.
11
The principle requires listed companies to report on whether they comply with the detailed provisions of the
Combined Code, and if not, then they need to explain why not.
12
The senior independent director should then communicate these views to the non-executive directors and to
the board.
13
Dewing and Russell (2003) quote the results of the study conducted by the Henley Management Collage,
which found a negative relationship between the representation of non-executive directors on the board and the
company performance.
12. Corporate Governance Jan Zika11
dismissed because it is after all up to the companies to convincingly explain to the
shareholders their deviations from the Combined Code.
In September 2002, another group chaired by Sir Robert Smith was set up to review and
develop rules for audit committees to be included in the Combined Code. Based on both the
Higgs Report and the Smith Report, the UK government delegated the Financial Reporting
Council to take the reports’ recommendations into account when drafting the new Combined
Code.
The response of policy makers and public authorities to the collapse of Enron and subsequent
scandals could also be seen beyond the USA and the UK. Leeds (2003) writes that the
European Union considered tighter regulation of auditors of public companies, new codes of
conduct for securities analysts, and new rules for dealing with financial derivatives. In
Germany, the Finance Minister proposed the creation of a special task force to fight
accounting fraud and to better protect private pension funds investors.
Corporate governance issues also rose in importance in developing countries. The OECD14
published the Principles of Corporate Governance to develop the foundation for
internationally acceptable corporate governance standards and practices. According to that
document, a high priority should be placed on the interests of shareholders, as recommended
by Norman’s (2004). The principles covered in the OECD document also became the agenda
for roundtable meetings with high-level policy makers and business leaders in Central and
Eastern Europe, Asia and Latin America organized by the International Finance
Corporation.15
14
Organization for Economic Cooperation and Development
15
International Finance Corporation is an affiliate of World Bank.
13. Corporate Governance Jan Zika12
As Leeds (2003) notes, scandals represented by Enron, can have the positive impact of
increasing the public’s awareness about corporate governance. It seems there is no longer a
need to explain what is meant by corporate governance regulation and why it is important.
Leeds (2003) suggests that better-informed and more alert stakeholders have at least the same
potential as new legislation to increase the level of integrity in the marketplace
Leeds (2003) also observes that the recent scandals served as a reminder that even a well
functioning market economy must constantly strive to balance private and public governance
responsibilities. Well-designed and enforced legislation defines positive and negative
incentives, to encourage behavior that strengthens the fair and efficient operation of the
marketplace.
At the same time, personal integrity, good judgment and other essential qualities cannot be
prescribed by law, but must be embedded in managers. Tipgos and Keefe (2005) support this
idea. They say that although legislation is important, it cannot prevent management fraud.
Fraud can be only stopped by the management itself, and corporate executives and their
advisors have a vast public responsibility similar to civil servants.
14. Corporate Governance Jan Zika13
Conclusion
Enron’s failure initiated broad debate not only over what went wrong, but also over how to
revise corporate governance standards. While some authors see flaws in the current
prevalence of the shareholder model and support a broader application of the stakeholder
model, others argue that the shareholder perspective is more important than ever before.
Advocates of the stakeholder model focus on the knowledge contribution of employees and
call for their participation in the strategy creation process. They further stress the importance
of eliminating of imbalance between top management and the remaining constituencies, and
of a shared goals and objectives. Finally, they maintain that corporate boards should be more
democratically selected and should more broadly represent those whose lives are impacted by
the company’s business.
Some critics of the strong corporate social responsibility theory object that the discretion
given to the managers in choosing between maximizing profit and other stakeholder benefits
causes inefficiency and stimulates fraud. Advocates of the shareholder approach explain that
shareholders have a special position not because they “own” the firm, but rather because of
the special nature of their relationship—the rate of return on the capital they provide depends
on the firm’s performance.
However, there seems to be a consensus on several issues. Enron’s case highlighted the
importance of properly inducting, training and developing board members, and also the
importance of allowing institutional investors to find and nominate replacements for
ineffective directors. Company-sponsored research on governance has the potential to create
benchmarks for good practice, and publishing a code of ethics could be the first of such good
practices.
15. Corporate Governance Jan Zika14
The fall of Enron and subsequent large corporate scandals provoked a relatively quick
response from policy makers all over the world. In the USA, the Sarbanes-Oxley Corporate
Reform Act became the most comprehensive reform of corporate governance law since the
Securities and Exchange Act. It requires greater accountability of top management and
revised the original shareholder model. In the UK the recommendations of the Higgs and
Smith Reports were used by the Financial Reporting Council to draft the new Combined
Code. Among other issues, the reports addressed the independence of corporate boards, the
transparency of decision making and the prevention of conflicts of interest. In order to
develop a foundation for internationally acceptable corporate governance standards and
practices, the OECD published the Principles of Corporate Governance.
Higher public awareness can be seen as a positive result of high-profile corporate failures and
it can be argued that better-informed and more alert stakeholders have at least the same
potential to bring more integrity to the marketplace as new legislation.
Enron’s collapse teaches us that even well functioning market economies must constantly
adjust the balance between private and public governance responsibilities. An appropriate
legal framework is indispensable, but qualities such as personal integrity, good judgment and
ethics can be only be partially influenced by law.
16. Corporate Governance Jan Zika15
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