Corporate ethics in TQM: management versus employee expectations and perceptions

Purpose – The objective of this research is to develop and describe a conceptual framework of corporate ethics in total quality management (TQM).

Design/methodology/approach – The research is based on a summarised in-depth and longitudinal case illustration. The summarised case describes corporate ethics in an intra-corporate relationship.

Findings – TQM requires human resources and failing to care for them will affect accordingly the success of TQM. The case description illustrates the evolution of management versus employee expectations and perceptions of corporate ethics. It has an emphasis on the human resources of a company that strives towards TQM. As the quality of corporate ethics decreases the outcome of TQM is also affected (i.e. directly or indirectly). The case is initialised in an atmosphere of management and employee optimism and positivism of corporate ethics, which is a requisite from both parties in order to ensure prosperous TQM. The successive change towards pessimism and negativism of corporate ethics in the intra-corporate relationship concludes the in-depth case description.

Research limitations/implications – Four parameters of corporate ethics are used to incorporate corporate ethics into TQM, namely management versus employee expectations and perceptions. Internal corporate quality management should always be regarded as dependent upon the achieved equilibrium between management and employee perceptions. It is also dependent upon the derived equilibrium between management and employee previous expectations.

Practical implications – An important insight of this research is that TQM requires the continuous attention to the management versus employee expectations and perceptions inherent in corporate ethics of internal business operations. Furthermore, corporate ethics is complementary to business ethics.

Originality/value – The case description has shown that TQM may be running well and accomplishing the hard goals. However, TQM is not only about figures, profits and costs. It is also a business approach that should penetrate all activities inside and outside that are related to the company, including the soft issues.

Corporate governance, board responsibilities and financial performance : the National Bank of Australia

This paper examines board responsibilities and accountability by management and Board of Directors in relation to the National Australia Bank's (NABs) performance. The NAB, an international financial service provider within the top thirty most profitable banks in the world, is compared with the Australian major banks. The evidence suggests that NABs poor performance was consistent with a lack of accountability, poor corporate governance and board dysfunction associated with fraudulent currency trading and the subsequent AUD360 million foreign currency losses. The NAB's performance is investigated by utilising accounting-based measures of profitability and cost efficiency as proxies for performance. Following the foreign currency trading losses in 2004 the NAB under-performed the other major Australian banks in terms of profits, cost to income ratio and growth in assets. In terms of profitability and cost efficiency NAB had the lowest ROE and ROA with a 19.7% fall in net profit and the highest cost to income ratio of 5 7.4% of any of the five largest banks. This case study provides an Australian example of poor corporate governance and suggests that financial institutions and regulators can learn from the NAB's experience. Failure to have top-down accountability can have significant impact on over-all performance, profitability and reputation. In particular, it suggests that management and Boards need to review their risk management procedures and regulators need to be more pro-active in their prudential oversight of financial institutions.

Pathology, power and profits...in paperback

Joel Bakan’s The Corporation is an accessible and engaging critique of the corporation written for a non-specialist, mass audience. It has been published in the UK to coincide with the release of the multi-award-winning documentary of the same name in UK cinemas.

Corporate culture and greed: the case of the Australian Wheat Board

Between 1999 and 2002, the Australian Wheat Board (AWB) was involved in an elaborate bribery, or 'kickback', scheme involving the illicit payment of A$300 million to the Iraq government for supposed 'transportation fees' that were funnelled to the Saddam Hussein regime. This was clearly in breach of the United Nations trade sanctions and was apparently perpetrated by the AWB to secure continued sales with the lucrative Iraqi market. This paper aims to gain further insight into how a corporate culture can lead to greed, corruption and deception. Specifically, this study aims to add to the literature by analysing, using Schein's (1997, 2004) theoretical framework, a case on the development of a corrupt corporate culture. Content analysis of official investigative reports and other published documents is used to determine the extent to which the AWB's corporate culture and leadership may have influenced the behaviour of senior managers. The findings indicate that the culture within the AWB fostered an environment in which senior managers placed sales and profits above the sanctions clearly enunciated by the United Nations.

Corporate governance and corporate finance practices in a Kuwait Stock Exchange market listed firm: a survey to confront theory with practice

Purpose– This paper aims to explore the issue of corporate governance mechanisms by including the importance of stakeholders, primary objectives of the firm and the ownership of top financial managers of listed firms in Kuwait in the survey tool. It attempts to investigate whether theory aligns with the behaviour of financial managers in practice in an emerging market case.Design/methodology/approach– A survey was developed to focus primarily on the current corporate finance practices implemented by CFOs in listed companies in Kuwait. The target respondents are listed firms in the Kuwaiti Stock Exchange (KSE). The survey includes questions on topics that are closely related to capital budgeting, capital structure, cost of capital and dividend policy. For example, the survey asks the managers how they estimate their cost of equity (CAPM or other methods) and whether the impact of the weighted average cost of equity is taken into consideration in their capital structure choices.Findings– A surprising number of firms are now widely using IRR for decision making. CAPM is also in use, whereas WACC remains the most popular method used. There is some support for the “bird‐in‐hand” dividend theory in the tax‐free environment. Firms in Kuwait do not have any particular source of capital structure choices when it comes to how best to finance their projects as is the case in the US market. Firms in Kuwait are consciously striving for maximizing profits and those managers are regarded as their most important stakeholders. This may indicate the existence of agency problems.Research limitations/implications– The limitation of this study lies in the absence of empirical investigation on how corporate finance decisions may affect firms' performance in Kuwait. Hence, empirical validation will be performed by the authors in the next stage of this research, which will form the basis for further research. Empirical validation for the impact of corporate governance on performance is needed.Practical implications– This research may benefit managers and decision makers in many aspects, including having an understanding of applying popular and the most suitable corporate finance and corporate governance techniques in the management of their companies. In this research, the authors have identified the gap between practice and academia.Originality/value– To the best of the authors' knowledge, this is the first study to examine comprehensively major areas of financial policies and practices and corporate governance in an emerging market case, especially in the Middle East. Kuwait provides a unique institutional setting in its taxation system. Therefore, this study will make a contribution to the general literature in this field.

What is the value of corporate sponsorship in sports?

This paper investigates the stock market reaction to investor mood swings resulting from the Indian Premier League (IPL) cricket matches. We find that stocks listed on the Bombay Stock Exchange (BSE) that sponsor the IPL cricket are unaffected by the cricket matches. This finding is robust along two lines: (a) the effect is insignificant both statistically and economically which we demonstrate using a simple trading strategy; and (b) results hold across a wide range of portfolios. Our results, both statistical and trading strategy-based, suggest that the portfolios of companies that sponsor cricket in India are efficient. Our findings stand in sharp contrast to the evidence obtained by the broader sports literature suggesting that sports actually impact stock returns, driven principally by psychological factors.

Principles of contemporary corporate governance

Aims at providing a concise presentation of key topics and emerging themes in corporate governance. The text provide both law and business students, as well as practitioners of law and management, with an easy to follow explanation and analysis of key corporate governance principles.

The role of internal audit in corporate governance and management

This research report is based on a study undertaken in Australia, and aims to evaluate the role of internal audit in corporate governance and management. It identifies the accountability structures and objectives of internal audit, considers the nature of internal audit functions and the extent of application of The Institute of Internal Auditors Standards of Professional Practice, reviews the relationships of the chief audit executives (CAEs) and assesses the nature of financial report risks and other issues covered by internal auditors. The research findings include a diversity of accountability structures for CAEs and a range of internal audit activities, with the application of the IIA Standards being in need of improvement. In conclusion, the researchers make recommendations for improvements in practice to be considered by The Institute of Internal Auditors and other regulating and governing bodies.

Management attitudes to corporate governance issues : evidence from Sri Lanka

This study investigates the attitudes of senior managers in Sri Lankan firms to governance issues using a countrywide cross-sectional survey. Respondents from 64 public firms provide information on manager's attitudes to internal control procedures: (1) producing misleading financial reports, (2) providing faulty investment advice, (3) permitting insider-trading, and (4) providing inaccurate advertising. We establish if these attitudes vary with 5 firm-specific factors: industry group, international exposure of firms, size, whether the firm was listed or not, and whether the firm had a written code of ethics. Employing ordinal logistic regression techniques, the results demonstrate significant variation by respondents within different types of firms. Specifically there was little variation to these issues when respondents were classified by industry, with most variation when classified by international involvement. Respondents from firms with significant international exposures were strongly opposed to most practices, while respondents from firms with written codes of ethics were strongly opposed to the production of misleading reports and insider-trading. Interestingly respondents from listed firms were most opposed to insider-trading, while smaller firms were more opposed to misleading advertising than respondents from larger firms. The results have important implications for the implementation of corporate governance practice.

Ensuring balance in corporate governance : parts 2F.1 and 2F.1A of the Corporations Law

Effective corporate governance must balance the competing, and at times conflicting, objectives of efficient endeavour and accountability. The CLERP amendments to the Corporations Law introduced on 13 March 2000 go a long way towards providing this balance. While the business judgement rule was introduced to promote efficient endeavour, Pts 2F.1 and 2F.1A maintain corporate accountability. This article compares Pts 2F.t and 2F.1A of the Corporations Law. It is argued that, although there are procedural and substantive differences between the two parts that need to be understood by practitioners, the importance of the two Parts is that they work together to provide for a much-needed improvement and enhancement of shareholder rights and remedies, thus upholding accountability in corporate governance.