Corporate Governance Essay Example | Topics and Well Written Essays - 2500 words

Corporate Governance - Essay Example This notion of corporate governance is similar with the explanation provided by Cadbury (1992). Fine corporate governance is linked with a lesser cost of capital, elevated returns on equity, better efficiency, consideration of the roles and responsibilities of the Board of Directors, integrity and ethical behaviour, disclosure and transparency and more constructive handling and equitable treatment of each and everyone of the shareholders in a firm such as respect for the rights of shareholders and recognition that the company has legal and other obligations to all legitimate stakeholders (Claessens, 2006), unlike in this case study. David and Victoria are the directors of the Becksville Limited and own between them sixty five per cent of the shares. There are two other shareholders who take little or no part in the running of the company. Both David and Victoria are also the directors of Worldspice Limited which is a company, like Becksville Limited, that deals with sporting and entertainment activities. Worldspice Limited went into a creditors voluntary winding up and there is a substantial deficit such that the creditors expect no more than 10 pence in the pound. Worldspice Limited had become insolvent mainly as a result of many speculative investments in attempting to develop the company’s activities. This speculative attitude was also adopted by David and Victoria in the running of Becksville Limited and this company has suffered losses resulting in the company being unable to pay a dividend for the past three years. David and Victoria have taken  £25,000 per year each by way of Directors remunerat ion during this period. David and Victoria have also in 2004 and 2005 made considerable donations amounting to  £100,000 to various charities. The minority shareholders of Becksville Limited have now discovered that David and Victoria in June 2005