Post Enron - Research Proposal Example | Topics and Well Written Essays - 2750 words

Post Enron - - Research Proposal Example This general understanding of corporate governance and ethics is not sector specific as companies are very unique from one another in terms of size and internal working culture. Poor corporate governance and enforcement hurdles are widely viewed as the structural weakness that resulted to the economic downturn experienced in the late 2008 (Sun, Stewart & Pollard, 2011). The banks that suffered credit crunch were well aware of impending problems but could not alert shareholders and the government about the impending tough economic times. Early detection necessitates adoption of proactive measures that help companies go through tough times. Introduction Corporate governance is the set of guidelines, legislations and processes that directs business operations in any given country. These laws define the relationships existing between top company management with its board of directors, stockholders, employees, suppliers and clients. There are other external publics which the company direc tly or indirectly interacts with in the course of its operations. These include the government, regulatory authorities and the neighbouring community. Corporate governance laws also determine the lines of congruence that the company has with the external business environment. These rules vary from place to place depending on the economic models countries adopt. For instance, some protectionist countries have laws limiting disclosure of local company information to limit economic spying. Despite existing legislations aimed at reducing corporate malpractices, there have been widespread allegations of bribery scandals pitting American multinationals with foreign governments. A New York Times article by David Barstow dated April 21st, 2012 gave alarming reports of Wal-Mart’s Mexican retail outlet involvement in corrupt practices with Mexican public officials. It is alleged that the company’s internal sleuths found that the executives had authorised payments, adding to arou nd 25million dollars, to these recipients so that they can obtain construction permits without doing an environmental impact assessment (Barstow, 2012). This is a big corporate governance issue because of the ripple effects it has caused to both the Mexican and American governments. According to Barstow (2012), to add to the graft accusations, the management is accused of concealing this internal audit information from the top management; this is against the public information disclosure laws set under the American financial sector management guidelines. Wal-Mart has the obligation to make open its internal audit reports since it is a publicly trading company; this is the reason it’s share trading prices fell by over 5 percentage points the next day after the allegations were made public. The Mexican government is establishing the country’s first anti graft law which is meant to stem economic crimes. This is according to Ivan Castano, in his article dated April 27th, 2 012, in response to these alarming allegations that has the potential of eroding the good gains made by the Mexican authorities in tackling economic crimes. The government has moved zealously to get to the bottom of the claims and punish the culprits to improve business environment that is just recovering from drug wars (Castano, 2012). Pedro Hernandez, a partner at