Case Study Of Corporate Governance In Reference To The Libor Scandal
The assignment discusses corporate governance in reference to the Libor scandal. The Libor scandal included most of the biggest banks in the world at the lack of good corporate governance. The scandal revealed the flaws and corruption in the banking system, this has left thousands of people questioning if whether the banking system can be trusted?
Introduction Discussed in this assignment in great detail below is; what Corporate governance essentially means, its application to king III, and the Libor scandal in which certain banks were implicated for fixing the Libor. Banks such as Barclay, HSBC, RBS, LIOYDS banking group and a few others mentioned below were …show more content…
According to Thompson (2007:20) corporate governance reflects the relationship between all stakeholders in the company-the management, the board of directors, the shareholders and any other stakeholders. It also includes the relationship between the goals of the organization and the many role players involved in the organization. Corporate governance can also be described as the set of processes, customs, policies, law’s and institutions affecting the way an organization is directed, administered and controlled.
Corporate governance is the way the business entity adds-value and maintains a long-term relationship with the entity’s stakeholders. Conducting affairs of the business in such a way that investors and other stakeholders have confidence in the management of the entity, to run the business ethically and lawfully, and to protect the interests of the investors and those of the business itself.
How does King III apply to corporate …show more content…
When the Libor was set too low people with savings and investments suffered because they were not getting much on their return earnings. When the Libor was set too high it affected people with loans as they had to repay too much on their loans and in terms of the municipalities of different towns the money lost could have been used to develop town. *source: http://www.rollingstones.com/politics/hews/everything-is -rigged-the biggest-financial-scandal-yet-20130425 Recommendations
The banks were able to manipulate the system because they were private banks that had no external regulation and there was not much transparency. Hence the banks were able to use the situation to their own advantage, therefore going forward it might not be possible to give the job to a central bank however, more transparency, accountability & ethical behavior are necessary and strict regulation is also appropriate.
External regulation such as external auditors and other relevant external bodies may have been required, because they would have been objective when attending to the affairs of the banks and the misconduct could have been detected much