Literature review

Kolk (2008) has examined the role of Sustainability, accountability and corporate governance:

exploring multinationals' reporting practices. There was 6 variable used in this study which is

corporate governance, sustainability, reporting, multinationals, Fortune Global 250 and

corporate social responsibility. Current years have seen a hasty amplify in responsibility

pressures on mainly large global companies. The enlarged call for transparency comes from two

different angles, which show some possible union in terms of topics and audiences:

accountability necessities in the context of corporate governance, which expand to staff-related,

ethical aspects; and sustainability reporting that has broadened from surroundings only to social

and financial issues. This article examines to what amount and how present sustainability

reporting of Fortune Global 250 companies incorporates corporate governance aspects. Many

multinationals, mainly in Europe and Japan, have started to pay concentration to board

supervision and structuring of sustainability errands, to observance, ethics and external

verification. While in depth disclosures are not yet widespread, some notable practices can be

found. Underlying dilemmas and complexities for managers in dealing with accountability to

shareholders and stakeholders, and the role of auditors, are indicated.

Halme & Huse (1997) has examined the role of influence of corporate governance, industry and

country factors on environmental reporting. There was 7 variable used in this study which are

Environmental reporting , annual reports ,  corporate governance , ownership structure , boards

of directors , industry factors , country factors and Scandinavia. The relatives among corporate

environmental reporting in annual reports and corporate governance variables, industry variables

and country variables are hypothesized and tested. Empirical confirmation is gathered from large

corporations in Finland, Norway, Spain and Sweden. The ecological disclosures are examined

with the help of a three-class categorization. Industry appears to be the most vital factor in

amplification environmental disclosure in annual reports. Corporations in industries which are

customarily painstaking to be polluting, report most on the environment.

Kelton & Yang (2008) has studied the impact of corporate governance on Internet financial

reporting. There was 3 variable used in this study which are Internet financial reporting,

Corporate governance and Disclosure transparency. This reading examines the connection

between corporate governance mechanisms and disclosure transparency measured by the level of

Internet financial reporting (IFR) activities. They have calculate corporate governance by

shareholder rights, ownership structure, board composition, and audit committee characteristics.

They have develop a disclosure directory to compute the extent of each model firm’s IFR by

presentation format, information content, and corporate governance disclosures. Consequences

indicate that firms with weak shareholder rights, a lower percentage of block holder ownership, a

higher percentage of independent directors, a more diligent audit committee, and a higher

percentage of audit committee members that are considered financial experts are more likely to

engage in IFR. The result propose that corporate governance mechanisms influence a firm’s

Internet disclosure behavior, presumably in response to the information asymmetry between

management and investors and the resulting agency costs. Additional exploratory analysis

indicates that the association between corporate governance and IFR varies with firm size. The

results suggest that new regulatory guidance in corporate governance leads to improved

disclosure transparency via IFR.

Armstrong, Guay, and Weber have examined the role of information and financial reporting in

corporate governance and debt contracting. There was 6 variable used in this study which

Financial accounting, Corporate governance, Board structure, Executive compensation, Debt

contracts and casual contracts. They have reviewed up to date literature on the role of financial

reporting transparency in reducing governance-related agency conflicts among managers,

directors, and shareholders, as well as in reducing agency conflicts between shareholders and

creditors, and offer researchers some optional avenues for future investigate. Key themes

comprise the endogenous nature of debt contracts and governance mechanisms with admiration

to information asymmetry between contracting parties, the heterogeneous nature of the

informational demands of contracting parties, and the heterogeneous nature of the consequential

governance and debt contracts. They also highlight the role of a obligation to monetary reporting

transparency in facilitating informal multiperiod contracts among managers, directors,

shareholders, and creditors.

Haniffa & Cooke (2005) has examined the impact of culture and governance on corporate social

reporting. Their intend is to enhance understanding of the possible effects of civilization and

corporate governance on social disclosures. The ethnic background of directors and shareholders

is used as a substitute for culture. Corporate governance individuality includes board

composition, multiple directorships and type of shareholders. The dependent variable, disclosure

in annual reports of Malaysian corporations, is measured by an index score as well as in terms of

number of words. Their consequences indicate an important relationship connecting corporate

social disclosure and boards dominated by Malay directors, boards dominated by executive

directors, chair with numerous directorships and foreign share ownership. Four of the control

variables (size, profitability, multiple listing and type of industry) were considerably connected

to corporate social disclosure with the exception of gearing. This reading has public policy

implications for Malaysia as well as a figure of other countries in the Asia–Pacific region.

Rezaee , Olibe and Minmier (2003) has examined the improving corporate governance the role

of audit committee disclosures. An growing number of earnings restatements along with many

allegations of financial report scam committed by sky-scraping profile companies (e.g.

WorldCom, Enron, Adelphia , Global Crossing) has eroded the public confidence in corporate

governance, the financial reporting process, and inspection functions. The Sarbanes-Oxley Act of

2002 was an effort to regain confidence and belief in corporate America and the secretarial

occupation. The Act addresses corporate scandals and the perceived crisis in the auditing

profession. Some of its provisions relate to the audit committee oversight function over corporate

governance, financial reporting, internal control structure, internal audit functions, and external

audit services. This reading examines three types of audit committee disclosures: the annual

report of the audit committee; reporting of the audit committee charter in the proxy statement at

least once every three year

Carcello, Hollingsworth, & Klein (2006) have examined Audit committee financial expertise,

competing corporate governance mechanisms, and earnings management. There were 4 variables

used in this study which are earnings management, real earnings management, corporate

governance and Sarbanes-Oxley. The prime objective of the Sarbanes-Oxley Act and recent

changes to stock exchange listing standards is to improve the quality of financial reporting. They

examine the associations between audit committee financial expertise and alternate corporate

governance mechanisms and earnings management. They find that both accounting and certain

types of non-accounting financial expertise reduce earnings management for firms with weak

alternate corporate governance mechanisms, but that independent audit committee members with

financial expertise are most effective in mitigating earnings management. Importantly we find

that alternate corporate governance mechanisms are an effective substitute for audit committee

financial expertise in constraining earnings management. Finally, we find either no association or

a positive association between financial expertise and real earnings management. Our results

suggest that alternate governance approaches are equally effective in improving the quality of

financial reporting, and that firms should have the flexibility to design the particular set of

governance mechanisms that best fit their unique situations. sclosure in the proxy statement of

whether the audit committee had fulfilled its responsibilities as specified in the charter. This

study conducts a content analysis on audit committee disclosures of Fortune 100 companies

Shivdasani and Yermack (1999) have studied “CEO involvement in the selection of new board

members- an empirical analysis”. The reason of their study was to see whether CEO is involved

in the selection of new director. When CEO serves on the no nominating committee or

nominating committee exists , firm appoint director which are independent , which are outside

director and depressing outsiders with conflicts of interest. Stock price reaction to independent

director appointments are significantly lower when the CEO is involved in director selection.

Their finding about the study was, evidence may illuminate a mechanism used by CEO to reduce

pressure from active monitoring and a recent trend of companies removing CEO from

involvement in director selection.

Reference

Kolk, A. (2008). Sustainability, accountability and corporate governance: exploring

multinationals' reporting practices. Business Strategy and the Environment, 17(1), 1-15.

Halme,M., & Huse, M. (1997).The influence of corporate governance, industry and country

factors on environmental reporting. Scandinavian Journal of Management, 13(2), 137-157.

Kelton, A. S., & Yang, Y. W. (2008).The impact of corporate governance on Internet

financial reporting. Journal of Accounting and Public Policy, 27(1), 62-87.

Armstrong, C. S., Guay, W. R., & Weber, J. P. (2010).The role of information and financial

reporting in corporate governance and debt contracting. Journal of Accounting and

Economics, 50(2), 179-234.

Haniffa, R. M., & Cooke, T. E. (2005). The impact of culture and governance on corporate

social reporting. Journal of Accounting and Public Policy, 24(5), 391-430.

Rezaee, Z., Olibe, K. O., & Minmier, G. (2003).Improving corporate governance: the role

of audit committee disclosures. Managerial Auditing Journal, 18(6/7), 530-537.

Carcello, J. V., Hollingsworth, C. W., & Klein, A. (2006). Audit committee financial expertise,

competing corporate governance mechanisms, and earnings management.

Shivdasani, A. and Yermack, D., ‘CEO involvement in the selection of new board members- an

empirical analysis’, Journal of Finance, Vol. 54, 1999, pp. 1829–54