How corporate governance can reduce outside monitoring


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In the early 2000s, the massive bankruptcies (and criminal malfeasance) of Enron and Worldcom, the events led to increased shareholder and governmental interest in corporate governance. The Enron collapse is an example of misleading financial reporting. Enron concealed huge losses by creating illusions that a third party was contractually obliged to pay the amount of any losses. However, the third party was an entity in which Enron had a substantial economic stake.

In our financial market, there have the comprehensive accounting standard and regulation to play monitor role in the market. However, good financial reporting standard are not enough to prevent above conditions. Therefore, if Corporation can develop well corporate governance, it can reduce the outsider monitoring. For the definition of Corporate Governance, it is defined as internal control system encompassing policies, processes and people, which serve the needs of shareholder and other stakeholder. Corporate governance can provide directing and controlling management activities with good business savvy, objectivity, accountability and integrity. Sound corporate governance is reliant on external marketplace commitment and legislation, plus a healthy board culture which safeguards policies and processes. It can help the financial market reduce the integrity problem and is useful to reduce the probability of stakeholder loss.

1.2 The Research Focus Subsection

In our financial market have so many financial problems like Enron. One of the reasons exist agency problem in the market. Therefore, the research will focus on corporate governance whether settle the principal-agent problem. This problem usually mean treat about the difficulties that arise under conditions of incomplete and asymmetric information, when an agent were hired. The most of the potential problems are moral hazard and conflict of interest, since the principal is presumably firing the agent to pursue about the interest of their principal.

The problem between principal and agent usually arises when a principal compensates an agent for performing to behavior to the principal and costly to the agent. There were high costly to the corporation pay out in order to monitoring the performance of agents. If the corporation has been not provided enough budget in this area, this will cause uncertainty and risk from the conflict interest between agent and principal.

Therefore, in this paper will discuss about using management account the corporate develop comprehensive internal control system, it whether overcome the agency problem in order to build up well corporate governance image to the public and the goal congruent between principal and agent.

1.3 Overall Aim & Individual Research Objectives

By using Management Account Tools, to ascertain the role of Management Account how to improve level of Corporate Governance during organization, in order to obtain advantage from well development of Corporate Governance

In this paper, it will ascertain the role of management account whether to improve the level of corporate governance in Hong Kong Listed Corporation in order to help corporation obtain any advantage for well development o corporate governance. In this paper, it will mainly focus the area of function and role of management account during corporation. Furthermore, it also finds our listed company whether needs to have the well corporate governance. After that, focus point will evaluate the management account tools how to help development corporate governance in Hong Kong listed corporation. The paper will estimate the listed corporation what benefits will obtain through management accounts tools. At last, it will find out the management account is whether help the listed corporation develop well internal control system in order to build up higher level of corporate governance.

Research Strategy:

In order to obtain above the research area, the paper will use primary data and secondary data to prove above argument points. The primary data will collect from questioner. The secondary data will be collected from other paper point of view.

1.4 Value of Research Subsection (200)

For the result of this paper, it can explain about listed corporation using management account in order to build up higher Corporate governance level. And it is how to improve ethic and increase corporate transparency level through management account tools. For the well corporate governance, it can help the corporation develop business ethics. Business ethics is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. For the theory, all aspects of business can be applied and it is relevant to the conduct of individuals and business organization as a whole. To enhance the corporate business ethic, it can be the corporate settle the agency problem. Business ethic can affect the corporate stakeholder. Therefore, evaluation of management account about develop well internal control system can help to settle the problem of this.

Another side, well corporate governance also helps corporate transparency develop in the financial market. The main focus point on corporate transparency can remove all barriers to and facilitating of free and easy public access to corporate information. Outside stakeholder can play a role to monitor the corporate performance. It can help to develop external control system monitoring the corpora

1.5 An Outline Structure

To Present a comprehensive and coherent report this dissertation adepts the following structure with respect to the presentation; Chapter 1 provides a brief description of the subject of this paper intends to analyze followed and detailing the objectives and scope of the study and define what value will be occurred in this paper. Chapter 2 will represent the body of the text cover a detail review of the existing literature on the topic of the management account. This section will be separated as three areas: external control, internal control and management account system to provide the reader an extensive knowledge on the concept of control system in the corporation. And Chapter three will be stayed along with the description of the research methodology. Furthermore, Chapter 4 will go to enlighten the reader on the finding of the study. The last chapter will be followed by a concluding paragraph and the author’s recommendations of the subject matter.

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