Identify Corporate Governance In Busy Directors And Audit Committee

Question: Discuss about Identify The Effectiveness Of The Multi-Dictatorship Among The Busy Directors And The Audit Committee. Answer: Introduction In recent decades, the corporate directors are looking forward to draw the public attention towards the current innovations. The emergence of the massive firms, managerial compensation, and accounting scandals are sometimes affecting the corporate governance within the audit firms (Allegrini and Greco 2013). The regulations of corporate governance are generally focusing on the independence, expertise, and composition of the board directors or audit committees. The stock exchange standards are also concerned about such components while formulating a structured corporate governance ethics (Dou, Sahgal and Zhang 2015). The study would thus explore the maintenance of the corporate governance in audit committee and busy directors. The chapter would provide the justified research objectives and questions for conducting the entire research. Based on the direction in this chapter, the further research process will be determined. Background of the Research The continuous innovations in the business industry are making the managers and the audit committees busy with their hectic schedule. The directors and the audit committee usually signify their efficiency by devoting their time and efforts towards their jobs (Larcker and Tayan 2015). Therefore, they usually do not pay more attention towards the media and policy makers. The lack of the exchange standard limit and particular regulatory aspects is the determinants of the effectiveness of the directors (Andreou, Louca and Panayides 2014). Hence, the multi-dictatorship may create the significant challenges due to the improper knowledge. Research Aim The aim of the research is to identify the effectiveness of the multi-dictatorship among the busy directors and the audit committee. Research Objectives To identify the relationship between the busy directors and the discretionary accruals To critically analyze the linking between the characteristics of the audit committee and the financial quality of the firm To determine the gap in the knowledge in understanding the process of multi-dictatorship and stock ownership To present the preferable recommendations to overcome the challenges identified in this study Research Questions What significance corporate governance has among the busy directors and audit committee? How the lack of knowledge in multi-dictatorship can affect the busy directors and audit committee? What are the major focuses of the busy directors in improving the audit quality within a firm? How the emerging challenges in the multi-dictatorship governance can be overcome? Research Rationale The skeptics usually question the effectiveness of the corporate boards as the relevant governance structure. The directors are usually alleged that they are too busy to fulfill their duties. The directors are usually involved with the monitoring and advising management process. Therefore, it is essential for them to invest the adequate time and efforts for gathering useful data and making the deliberate decisions (Vafeas and Vlittis 2016). However, there is the significant criticism, which follows the allegations against the directors of not providing enough time to make the relevant decisions. On the other hand, the multi-dictatorship is sometimes misunderstood by the business officials. The lack of knowledge in terms of understanding the role of the multi-dictatorship may also affect the entire corporate governance process (Andreou, Louca and Panayides 2014). The literature study will thus shed lights on the factors that influence the performance of the busy directors. Literature Review The literature review introduces the theoretical scenario of the subject in relation to the research process. This chapter of the study would provide the linking between the major variables related to the multi-dictatorship. The study will also highlight the functions of the busy directors and managing the organisational performance. The findings derived from this chapter would be connected with the research study in the further section. Determinants of the Busy Directors The director market is much efficient and it demands the skillful approaches for managing the organisational functionalities. The subsequent studies have presented the report that the successful directors are usually involved with the multiple board appointments. In such appointment sessions, they ought to suggest the positive approaches in order to improve the performance quality. Liao and Hsu (2013) argued that the linking between the busy directors and the performance governance process does not provide any consistent result. The busy directors need to be more determined towards managing their responsibilities towards the firm. Majority reports point out that the organisations with busy directors often face the scenario of weak governance (Dou, Sahgal and Zhang 2015). The performance parameter is relatively poor in compare to other firms. It is also argued that the there is the higher probability of fraudulent accounting process if the directors do not pay the proper attention tow ards the governance process (Dou, Sahgal and Zhang 2015). It is usually observed that when the directors manage the multiple executive places, they may fail to provide the adequate attention towards the other dictatorships. As a result, they are often alleged for mismanagement of the firms performance. Relation between the busy boards and firm value The directors are usually engaged to monitor the executive team for preventing the different forms of self-dealing. They even help the management team to structure the long-term corporate strategy for creative the shareholder value. On the other hand, the corporate governance is the essential factor for leading the firm towards right directions. In majority of the cases, it has been observed that the busy directors are not able to pay attention towards the policies implemented for governing the entire organisation (Andreou, Louca and Panayides 2014). The independence level of the audit committee becomes the reason for the mismanaged schedule. It generally affects the quality of the financial reporting of the firm. It is important for the firms to focus on more realistic figure for the companies. Accordingly, the future functionalities would be determined. However, it has been observed that appointing the multiple dictators may fail to address imposed policies and regulations on the f irm (Dou, Sahgal and Zhang 2015). If the multi-dictatorship number is increased, it would bring changes on the discretionary accruals. Accordingly, the audit committee needs to hold the position of the multi-dictators. The more the directors devote time for the benefit of the firms, the more is the earning. Viewing it from other perspective, devoting quality time towards the benefit of the firms results in the introduction to concrete plans, which prove beneficial in upgrading the quality and standards of the business. Even though the directors have busy schedule, extracting some time for sitting with the managers to gain an insight into the current strategic position would prove fruitful in terms of developing reports for audit. Accuracy would be a crucial element in the preparation of this report. Absence of this accuracy would add vulnerability to the governance of the companies, resulting in chaotic business environment. Multi-directorship and stock ownership relationship Legal framework attains a back seat in the special jurisdiction of Saudi Arabia. In comparison to Saudi Arabia, there are strict rules and regulations, which help in the management of finance. Adherence to these rules and regulations would help the personnel to develop accurate reports of the undertaken activities (Tricker and Tricker 2015). This accuracy would be a further assistance in terms of conducting the audit activities. Lack of any statistical evidence portrays instable relationship between the directors of Saudi Arabian companies. This instability projects a low graph for the outcome of the investments made by the companies. Suggestion of the ways and means to tackle with the low income is the main theme of critical review of the paper published by Mohammed Alshetwi. Accumulation of more shares by the committee members of the stock ownership gives rise to their strictness and dedication, which is absent when their share possession is null. This strictness compels the members of the stock committee members to publish reports, which consists information about less earnings (Bhasin 2016). Consideration of 98 non-financial Saudi Arabian companies in comparison to the shortage of directors proves inappropriate in terms of executing the auditing activities. 41% is quite large; however, the directors sitting for one or two audit committee is inadequate regarding the application of corporate governance. All these aspects point to the fact that the directors, engaged with the other companies, do not possess much flexibility to attain better placement offers from the foreign countries. In view of these aspects, the sector, as a whole, needs to indulge in meetings with their foreign delegates in terms of progressing with the directorial decisions. Involvement of the staffs in these meetings would help the staffs to assess the effectiveness of the undertaken decisions in terms of carrying out effective auditing activities (Bain and Band 2016). Comparative analysis: Similarity Chalking out effective plans for the future, based on the current strategic position of the companies ties the articles in the same thread. Interactive nature of the meetings and conferences would enhance the understanding of the personnel, stakeholders and shareholders about the effective ways and means to carry out the audits. The major drive behind this is the clarification of doubts. Clarity in the infrastructural operations would enable the personnel to practice transparency in their business. This transparency, further, would act as an agent in gaining trust, dependence and loyalty from the customers. Collaborative partnership between the members of the auditing committee adds to the positivity of the articles though the projection of the similarities (Peters and Romi 2014). This positivity and unity attaches somewhat less importance to the aspect of less earning, even with the application of effective management techniques. Differences The main propositions of the first and second article are the earning higher levels of management. Inability to devote quality time towards the benefit of the company would decrease the intensity of the aspect of higher. This decrease would compel the companies to encounter losses, which contradicts the true essence of the aspect of corporate governance. Countering this, inability to devote time for the benefit of the company, itself project loss, which nullifies the need of governance in the company business. Even though the personnel sit in the meetings, they fail to establish authentic and exact reports (Tricker and Tricker 2015). This is due to the lack of attention to the viewpoints placed by the personnel. On the contrary, sitting with the managers would enhance the clarity of the directors in terms of the financial conditions of the companies. Maintenance of accuracy within the financial reports makes the inabilities less important. Unity and team work are the components, which possesses flexibility to escalate the level of the earnings through management. Eagerness and willingness to maintain consistency in business would provide the personnel with the strength to deal with the potential challenges. Firmness towards these aspects from the employees end would nullify the harsh blows exerted by the managers for developing inaccurate audit reports (Bain and Band 2016). According to one of the articles, more number of committee members possess is less likely to produce higher level of earning management. This is due to the difference of opinions. Therefore, in order to avert these kinds of situations, discussions, open forums need to be organized frequently for maintaining stability in t he relationship between the functional units of the companies. One of the other points specified by the articles is the relationship between the members of auditing committees and their attempts to develop authentic reports. Within this, accumulation of shares is a theme developed by the articles. Instead of accumulating shares, if the personnel attempt to establish stable relationship with the managers through meetings, discussions and open forums, stability would prevail within the business environment (Peters and Romi 2014). Methodology: Research philosophy Perceiving the research from a particular philosophy helps the researcher to achieve positive outcomes. There are mainly three kinds of philosophy, through which the research are conducted. They are positivism, post-positivism and interpretivism. Positivism helps the researcher to develop make effective application of the scientific and real knowledge (Mackey and Gass, 2015). However, in case of this research, the researcher would choose interpretivism in order to interpret the given facts in a way of assessing the corporate governance techniques applied by the members of the auditing committee. Research design There are three designs, which are applied for conducting researches. These are exploratory, explanatory and descriptive. Explanatory design helps the researcher to explain the facts and concepts in details. Exploratory design enables the researcher to explore new facts from the available ideas and concepts. Descriptive design acts assistance for the researchers in terms of shedding light on the basic concepts (Silverman 2016). In this research, the researcher would select exploratory design for exploring new facts from the given ideas and concepts regarding the approach of the directors and members of the auditing committee towards the corporate governance. Research approach Deductive and inductive approaches are the two types of approach, through which researches are conducted. Deductive approach helps the researcher to deduce important facts from the available data. On the other hand, inductive approach helps the researcher to develop theories and models from the given data (Mackey and Gass 2015). In this research, selecting inductive approach would enliven the relationship between the members of the auditing committee and their attempt to publish authentic reports. Data collection Data relevant to the research are collected mainly through primary and secondary data. Within this, there are subdivisions, quantitative and qualitative. In case of the primary quantitative, the data is collected through surveys and interviews. Herein, surveys are quantitative and interviews are quantitative. On the other hand, in secondary analysis, themes are developed (Silverman 2016). Typical example in this direction is the responses provided by the managers. Qualitative data collection method would be used by the researcher for collecting data on corporate governance displayed by the members of the auditing committee. Data analysis The collected data is analyzed through primary and secondary methods. Within this, there are subdivided into quantitative and qualitative. As secondary research method is selected in this research, therefore the primary method is nullified in this case. As a matter of specification, charts, tables and graphs would be used by the researcher to analyze the collected data (Mackey and Gass 2015). This would be done by developing relevant themes to corporate governance and the relationship between the directorship and the members of the auditing committee. The pictorial representation would enhance the clarity of the personnel in terms of the corporate governance. Ethical considerations Researchers attempt to abide by the ethics for conducting the research. Legislations such as Data Protection Act (1998) would help the researcher to avert the instances of collusion and plagiarism. Along with this, compliance to the research ethics would help the researcher to make use of the sources, with the permission of the officials (Silverman 2016). On the contrary, non-compliance to the ethics would qualify the researcher as a traitor in terms of experimenting with the individual sentiments of the scholars by not acknowledging them in the references and in citations. 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