Essay on Corporate Accountability

2096 Words 9 Pages
Corporate Accountability

Table of Contents Page
1.0 Introduction…………………………………………………………………….3
2.0 The UK and the USA approaches………………………………………………3
3.0 Critical Evaluation of the use of the different Approaches…………………....4 3.1 The UK Rule-based Approach…………………………………………...4 3.2 The U.S.A Principle-based Approach……………………………………6
4.0 Evaluation of the reflection of specific systems…………………………………..7
5.0 Conclusion……………………………………………………………………….....8

Corporate Accountability
1.0 Introduction
Although the definition of corporate governance varies from one person to another, it is indicated that the 1992 United Kingdom Cadbury Report as well as the South African King Report of 1994 defined corporate
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Under the USA corporate governance approach however, the approach is principle-based which is mainly controlled by flexibility and the Government. This approach establishes the norm and benchmarks for exercising good governance and gives corporations more flexibility in establishing their own rules of corporate governance that best fit their circumstances. However, The USA principle-based and UK rule-based approaches are criticized as discussed below.
3.0 Critical Evaluation of the use of the different Approaches
3.1 The UK Rule-based Approach
Evidently, the UK principle-based approach combines high corporate governance standards with low associated costs. The rationale behind the UK-based approach recognizes the fact that good governance is a device that can be utilized in the improvement of the board’s management ability and also providing accountability to the company shareholders.According to the Cadbury report, Britain’s competitive position is determined by how effective the boards exercise their responsibilities.The boards must thus be free to take steps in driving the company forward but in accordance with the existing frameworks of effective accountability.This is said to be the very essence of good corporate governance as stipulated under the Cadbury report.
The UK-based approach basically has several benefits which studies have revealed by virtue of its performance. According to the 2005 FTSE ISS Corporate

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