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Industrial authority and its improvement in Hong Kong on a review on relative industrial authority are the paper’s title to be critiqued in this critique. It is an article on corporate governance authored by Bryane Michael and S.H. Goo. The authors of the article have reviewed the developments in Hong Kong in company governance. As the discipline of corporate governance narrows, much empirical observation checks the very characteristics of company governance (Michael & Goo, 2015). Policy- and legal-related policies look at the normative corporate governance reform issues yet reasoning about corporate governance in itself as a matter involves having a look at the refinement at the country level. The stance here is true regarding thinking about corporate governance at the country level as this involves consideration of every individual in that particular country. This paper and critique focus on the strengths and weaknesses of corporate governance concerning business ethics and Corporate Social Responsibility (CSR).
The background of this article is all about corporate governance concerning the entire country. Its purpose is to find out to what degree the experience of Hong Kong proves or disapproves theories from company governance for various issues and concerns. These issues include; executive compensation, ownership of the family, self-dealing, and concentration in Hong Kong, among others. Corporate governance emerges to be the main idea of this article. Being the argument of the article, the authors review the corporate government on its recent developments in Hong Kong as a key place in the USA. They have viewed it on various dimensions like the degree of family control, self-benefit harms, and feasible results of shareholder’s attentiveness on company authority execution.
The authors have organized their study in some manner to enhance understandability and the information flow in some different sections. They have provided an outline of the company governance in Hong Kong, and also show how better corporate governance in Hong Kong at least correlates with higher share price premiere in one section (Michael & Goo, 2015). Another section shows an outline of crucial company governance from outside the United States and how to handle the socially disastrous household dominance of outlined corporations. Another segment is the third which deals with the self-advantage of an organizational position between connected parties. In this case, for instance, a late study of the economic wave has considered the role of such self-benefit on share-holder values and the company performance, yet nobody has looked at the fit of such self-benefit to the picture of the wider company governance. The fourth section focus on the intensive shareholdings and their roles in decreasing the quality of industrial governance and the fifth provides an outline of two key matters in many authorities.
The argument in the article is effective or convincing according to the author’s findings in this article. For instance, on contrasting two different corporate government measures looking at the perspective of the commerce system generally and the other at particular industrial governance practices, Hong Kong rates excellently or poorly according to the authors. This depends on which industrial government consideration is looked at. Hong Kong is rated second just after Singapore by the statistics of the competitive forum of the world. This means that this region has much more to do in comparison to other countries to achieve maximum scores regarding these evaluations. Therefore, according to the authors, the accounting area seems to be best for Hong Kong companies regarding companies’ industrial governance practices in Hong Kong. The outcomes assigned to different features of industrial control in Hong Kong are in line with the CSLA analyst including compliance with general accounting principle regulations and policies and rules applicable to corporate governance culture. Therefore, this activity seems an important issue concerning the evaluation of Hong Kong companies as there is a clear indication of ethics in corporations’ evaluations.
Families’ control in corporate lives is another important issue detected by authors in this article in Hong Kong. Households have continuously managed and continue to control Hong Kong’s companies (Michael & Goo, 2015). This indicates that Hong Kong has relatively grown from family-controlled individualism. According to the authors, families in Hong Kong controls the subsequent highest share of the corporations within the neighborhood from Indonesia. Yet the Tai of the families of Tai-pan controls few of the industries than other authorities. The weakness associated with family-based corporate governance is that it risks crowding out the non-family-based interests hence family interest discriminates or crowds out productive investment. This issue, therefore, calls for a policy to seek to change the status quo hence enabling corporations to work towards enhancing positive business ethics and good corporate social responsibility to society. Good companies’ CSR and business ethics are of great importance to society as they enhance the community’s welfare.
Another important issue put into consideration in this article by the authors is the encouragement to engage in government-related activism of Hong Kong pensions. Pension investment leads concerning the historical evidence show domestic investments lead to a broad increase of corporations and better oversight over these corporations. In consideration of the given example, Sweden gives a useful and recent sample for Hong Kong. This is due to its size, that is, economic terms, population terms, and the fast development led by the government of a national pension company. Better corporate governance with a government relation, therefore, means good business ethics and proper CSR of the corporations working concerning the government. Companies’ positive relationship with the government ensures that the companies work toward the interest of the society, hence the importance to the community due to good business ethics and corporate social responsibility. The strength of this character of the companies and the government leads to a positive attribute towards working to the social interest and ensuring acceptable corporations’ behaviors towards society.
Self-dealing reduction by connected individuals or parties is another important issue considered by the article’s authors. They suggest that connected parties often lead to more harm than good. Transactions of the associated parties in Hong Kong reduce shareholder value. According to the authors, measuring the expropriation extent by insiders measures the degree to which the scope of transactions of the connected parties affects the value of the firm in Hong Kong. A company’s value decreases by about 30 percent when connected individuals take part in a takeover (Michael & Goo, 2015). In another case, connected party asset sales seem to reduce a firm’s value by about 20 percent as calculated by the market premium over its book value. The challenge associated with such a case is lacking information about the joined party transactions as this problem results in the firm’s value destruction in Hong Kong, which means bad business ethics and CSR. To curb this challenge, and enhance proper business ethics and CSR, involves strengthening derivative actions and oversight of the minority shareholder. This is an important approach to the community involved as the corporations’ shareholders due to good business ethics and CSR.
The vetting regime is another important issue in Hong Kong put into consideration. This region has one of the most limiting and connective regimes in the world of connected persons. However, this regime depends more on the executive’s goodwill in corporations to individually proclaim transactions of connected parties. Goodwill comprises a statement of listed companies in Hong Kong received by HKEx of the connected individual transactions (Michael & Goo, 2015). HKEx decides the suitability of the goodwill and later announcements are made to the companies’ stakeholders. Vetting, therefore, is of much importance to society as it enhances better business ethics, CSR, and corporate governance.
Reducing shareholders’ concentration is another factor considered in Hong Kong. No doubt that there is much shareholders-concentration and hence reduction is necessary. According to the authors, custodians could hold shares in street names unlike the one shown on the data (Michael & Goo, 2015). This means negative corporate governance which also reflects negative business ethics and CSR. Reducing concentration, therefore, will be of much importance to the community by converting the negative view to a positive one. This will mean better relations among the real shareholders hence working towards the interest of the society.
Other important issues considered include; non-members concentrated holdings, derivative actions on empowering minority shareholders, open-ended vehicles to open closed companies, Hong Kong’s two-non issues corporate governance, and corporations’ accounting and auditing which seems to be ok. In derivative action towards empowering minority shareholders, a common-sense instinct that shareholders’ lawsuits increase the value of the firm by cleaning up industrial governance is much supported by the econometric evidence (Michael & Goo, 2015). Corporate governance clearing means negative business ethics and CSR in corporations. In another view to enhancing good corporate governance, executive remuneration is necessary. This remuneration represents an important issue in corporate governance hence it is of much importance to the companies. When corporate governance is sorted, it results in good business ethics from the executives toward shareholders and all the organizational stakeholders. It also enhances good CSR by ensuring companies work towards the interest of society. Conclusively, corporate governance, good business ethics, and CSR are necessary for the betterment of corporations and hence must be enhanced.
Reference
Michael, B., & Goo, S. (2015). Corporate governance and its reform in Hong Kong: a study in comparative corporate governance. Corporate Governance, 15(4), 444-475. Web.
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