Enhance Corporate Accountability Research Articles

Privatisation, empowerment and accountability: What are the policy implications for establishing effective farmer organisations?

Weak institutional development and information flows have constrained the extent to which the smallholder farming sector in developing countries can significantly drive growth and poverty reduction. This is despite widely implemented economic liberalisation policies focussing on market efficiency. Farmer organisations are viewed as a potential means of addressing public and private institutional failure but this has frequently been limited by inequalities in access to power and information. This article investigates two issues that have received little research attention to date: what role downward accountability plays in enabling farmer organisations to improve services and markets, and what influences the extent to which downward accountability is achieved. Kenya Tea Development Agency (KTDA), one of the largest farmer organisations in the world (>400,000 farmers) is examined alongside wider literature. Mixed methods were used including key informant interviews, and eight months of participant observation followed by a questionnaire survey. The article concludes that without effective downward accountability farmer organisations can become characterised by institutions and mechanisms that favour elites, restricted weak coordination and regulation, and manipulated information flows. This in turn reduces individuals’ incentives to invest. If farmer organisations are to realise their potential as a means of enabling the smallholder sector to significantly contribute to economic growth and poverty reduction, policy and research needs to address key factors which influence accountability including: how to ensure initial processes in formation of farmer organisations establish appropriate structures and rules; strong state regulation to enhance corporate accountability; transparent information provision regarding actions of farmer organisation leaders; and the role independent non-government organisations can play. Consequently attention needs to focus on developing means of legitimising rights, building poor people's capacity to challenge exclusion, and moving from rights to obligations regarding information provision.

Technical Note: Company Risk-related Disclosures in a Code Law Country: A Synopsis

This synopsis provides a concise historical contextualisation of current risk disclosure issues, highlights major factors influencing contemporary risk reporting practices, and engages in a reflective overview of four recently published papers on aspects of corporate risk-related disclosures in a code law country, Portugal. The breadth and depth of our analysis is modest. Nonetheless we report findings indicating that risk-related disclosures are inadequate, lack transparency, and compound the difficulty of assessing the risk profile of a company. We contend that recent regulation initiatives have been of dubious effectiveness in improving the quality of risk information disclosed. In respect of the Portuguese context, we find that companies disclose risk-related information principally to reduce agency costs and to enhance corporate reputation. We contend that enhanced corporate accountability would be more likely to ensue if further disclosures of relevant risk-related information were mandated. One mechanism to do so would be through regulations recommended by the International Integrated Reporting Committee (IIRC).

Enhancing Corporate Accountability for Human Rights Violations: Is Extraterritoriality the Magic Potion?

The United Nations Guiding Principles on Business and Human Rights, resulting from the work of John Ruggie and his team, largely depend on state action and corporate good will for their implementation. One increasingly popular way for states to prevent and redress violations of human rights committed by companies outside their country of registration is to adopt measures with extraterritorial implications, some of which are presented in the article, or to assert direct extraterritorial jurisdiction in specific instances. Some United Nations human rights bodies and non-governmental organisations are clearly supporting the use of extraterritoriality and have argued that international human rights law places an obligation on states to embrace extraterritoriality so as to better control the activities of companies registered on their territories. In this context, the article aims to determine whether extraterritoriality is the magic potion that will help enhance corporate accountability for human rights violations committed overseas. The article explores whether such obligation exists and, beyond this, whether extraterritoriality should be further encouraged.

Enhancing Corporate Accountability under the Criminal Code through Enforcing Corporate Social Responsibility

Domestic and international legislation and jurisprudence continues to recognize the prominent role that corporations play in, and the significant impact they have on, contemporary society. As a result, in Canada, corporations are subject to multifarious regulation and penalties for noncompliance, which traditionally result in substantial fines against corporate entities and, more rarely, piercing of the corporate veil to impose individual liability. However, it is widely recognized that those directly responsible for the offending behaviour often go unpunished, or that the fines and punishment are simply the cost of doing business. This approach to sentencing is of limited effect in curbing recidivism and promoting respect for the law and the maintenance of a just and safe society. In this paper, I seek to draw attention to and expand on the paucity of legal scholarship and jurisprudence considering whether greater emphasis on rehabilitation and corrective sentencing for corporate offenders under the Criminal Code would be more consistent with the legislated objectives of sentencing and good corporative citizenship. Ultimately, I take the position that a more principled approach to sentencing, which would utilize, for example, the existing probation and policy-making powers where appropriate, would result in more meaningful sentencing process and effective sanctions to combat corporate accountability and achieve corporate social responsibility in greater accord with the public interest. Part one of the paper outlines the purpose and objectives of sentencing under the Criminal Code of Canada and examines why a narrow approach of deterrence is not effective in achieving corporate accountability. Part two explains the concept of CSR and how it accords with the sentencing objectives and considerations for corporate offenders. Finally, part three provides practical examples of how CSR principles have and can be employed by courts to more effectively achieve corporate accountability.

Social and environmental report assurance: Some interview evidence

The steady growth of social and environmental reporting (SER) is being accompanied by an increase in social and environmental reporting assurance (SERA). The existing literature on SERA suggests that it is necessary to build credibility and trust among corporate stakeholders. Prior work has also found evidence of managerial and professional capture of SERA. In this paper, we present empirical evidence from interviews with corporate social responsibility representatives from 20 UK listed companies on whether they consider SERA to be necessary. We believe this to be the first research into SERA that uses an interview method. Our interviews revealed mixed feelings. Half of the respondents believed that external SERA would enhance credibility and trust which confirmed the prior literature. However, the other half believed that external SERA was not necessary, believing that internal assurance was sufficient. This was because they saw SERA as predominantly a managerial tool, useful for checking the efficiency of internal management control systems, rather than as a mechanism for enhancing corporate accountability to stakeholders and building credibility and trust. The potential for SERA to be a mechanism whereby greater dialogue is created between companies and their stakeholders on social and environmental issues is not being harnessed. This paper thus demonstrates a fundamental difference between the external prior normative literature and the managerial motivation in the SERA area.

Enhancing Corporate Accountability through Contextual Ethical Exercises in Corporate Law Teaching

The collapse of Enron in the US and of HIH Insurance in Australia, along with other developments, such as the findings of the Special Commission of Inquiry into (James Hardie Industries') Medical Compensation Research and Compensation Foundation, highlight a perceived decline in corporate ethical accountability. Each of these events featured lawyers behaving unethically or otherwise inadequately in a broad social context. Realistic ethics education of law students, many of whom will become future corporate officers and directors, offers harm minimisation in response to rising standards of corporate accountability. Ethical simulations of this nature are a part of the wider arsenal of strategies to limit the potential for future corporate collapse and dishonour. This article explains how it is possible to successfully expose students of corporate law to the reality of ethical conflict within corporate environments. Online simulation of corporate ethical dilemmas allows students and trainee officers to anticipate what they will encounter in the corporate workforce and prepare them to apply alternative ethical models in deciding how to respond to those dilemmas. Monash University Law School and the Melbourne Law School are collaborating in producing two online exercises to introduce students to ethical pitfalls in directors' duties and corporate tax evasion. The simulations are analysed in the context of initial student evaluations and the article concludes with a brief exploration of the potential for future ethical education initiatives.

Corporate social reporting and stakeholder accountability: The missing link

Recent years have witnessed a significant degree of administrative reform, in terms of the increasing number of major companies proclaiming their social responsibility credentials, and backing up their claims by producing substantial environmental, social and sustainability reports. The paper critically evaluates the degree of institutional reform, designed to empower stakeholders, and thereby enhance corporate accountability, accompanying these voluntary initiatives, together with that potentially ensuing from proposed regulations, later rescinded, for mandatory publication of an Operating and Financial Review by UK quoted companies. It is concluded that both forms of disclosure offer little in the way of opportunity for facilitating action on the part of organizational stakeholders, and cannot therefore be viewed as exercises in accountability.

Cycles of Crisis and Regulation: the enduring agency and stewardship problems of corporate governance

Corporate governance crisis and reform is essentially cyclical. Waves of corporate governance reform and increased regulation occur during periods of recession, corporate collapse and re‐examination of the viability of regulatory systems. During long periods of expansion, active interest in the conformance aspects of governance diminishes, as companies and shareholders become again more concerned with the generation of wealth, rather than in ensuring governance mechanisms are working appropriately for the retention of wealth, and its use for agreed purposes. This cyclical historical saga revolves around the enduring agency and stewardship dilemmas of governance. Complacency concerning corporate governance during confident times compounds ensuing crises. Such dilemmas are universal in market systems, though internationally with different systems of corporate governance the unwinding of this saga has occurred at different times, for different reasons, and with different consequences. Corporate governance is about wealth generation and risk management, and these duties require continuous and simultaneous performance. Avoiding mandatory restrictive over‐regulation requires active market regulation, particularly at times of expansion. The drive to make corporate governance both improve corporate performance and enhance corporate accountability will continue.

The emerging patterns of power in corporate governance – Back to the future in improving corporate decision making

Social institutions are experiencing change in their patterns of power as they are re‐aligned to an increasingly complex world and the onset of the new information economy. Attention has been drawn particularly to the need to improve corporate governance as a means to enhance corporate accountability and improve corporate performance. This paper consequently explores the distribution of corporate power and the processes that can foster higher quality decision making and actions by boards. The paper investigates the fundamental difference between the exercise of leadership, management and political power within an organization and, particularly, the responsibility and power relationships between an organization and its board. The authors assert that if the patterns of power are well understood then some things can be said about the patterns that are likely to emerge and what structures might be more effective than others. The paper concludes by arguing that the manner and style of corporate governance could benefit from some further refinement.