Citic Pacific Case Study

713 Words 3 Pages
Implementations Citic Pacific should acknowledge the need to change its internal controls, primarily the delegation of authorities among the executives. There should always be a check and balance in the performance of duties, and a separation of authorities between the maker and an approver to keep an efficient control. Furthermore, there must be a change with the way the firm pays bonuses. The management should consider revising its remuneration policy because the performance-based of giving incentives is prone to manipulation and does not comply with the goal of achieving long-term objectives.
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As a publicly listed company, Citic Pacific has an obligation to inform the public about all of the material information involving
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It is a systematic means of establishing order between the board of directors and the top-management by ensuring accountability, fairness and transparency to its stakeholders which includes, customers, employees, government, and investors. It is an effective tool used to monitor managerial decision because corporate governance mandates that managers must observe transparency and fairness in making judgments, define managerial responsibility, and assigning accountability for specific actions (Sullivan, 2009). Moreover, corporate governance requires that each decision made by the management support public policy and abide with different rules and regulations that promote the interest of the public (Nestor, Yasui, and Guy, …show more content…
Ownership concentration means the overall ownership structure of the people contributed to the capitalization of the firm, while executive compensation includes salary, incentives, and bonuses given to the managers, and the Board of Directors represents individuals who monitors and controls the overall decision process of the firm. The internal mechanisms control and monitors the activities of the organization and take corrective actions when the company off tracks it strategic goals (Davoren, 2015). In case of Citic Pacific, internal mechanisms proved insufficient. They were more focused on making profits and when they didn’t, they failed to report their actions in a timely manner.
On the other hand, the external corporate governance mechanisms are composed of the external forces for market control including the competitors, financial institutions, trade unions and the regulatory bodies (Davoren, 2015). Competitors impose the need for the existing managers to perform well and be able to create effective strategies to improve the business, while the supervising body regulates hostile takeovers and suggest guidelines for best

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