Bob Tricker (2008) states that Corporate governance is “an internal system that encompasses
polices, processes, people, and which makes sure the needs of shareholders and other stakeholders are met in full. This will be accomplished by directing and controlling managingactivities using good business practices, objectivity, accountability and, of course, inte
(Tricker, 2003, pp65). From this definition it is clear that Corporate Governance is a complexissue for businesses to consider. In this report I will examine the academic theory on corporategovernance and link it to the multinational electronics organisation, Olympus.The development of corporate governance in the UK was initially driven by corporate collapses
and financial scandals. The UK’s Combined Code (1998) embodied the findings of a trilogy
codes: the Cadbury report (1992), the Greenburg Report (1995), and the Hamper Report(1998). When examining the current academic theory of corporate governance it is clear thatmuch of the topics discussion has been centered on various legislation policies, to preventfraudulent activities and the need to remain transparent in all dealings. The development of Corporate Governance is described by Mallin (2004) as a global occurrence, and as such is acomplex area including legal, cultural, ownership, and other structural differences. Thereforesome theories may be more appropriate and relevant to some countries than others, dependingon what stage an individual country, or group of countries is at.Effective corporate governance relies on certain laws to be passed, as well as a certaincommitment from the marketplace, and also a healthy board culture, as this will make surepolicies and processes remain constant. Corporate governance must have safeguards in placeto ensure it is always being carried out at optimum levels. (Mallin, 2004) The company itself must view the governance as that of quality or else there can be very serious implications for abusiness and its value including a drop the companies share price and revenue.It is clear that this is an issue which needs to be considered across all industries but can beconsidered as crucial in a high value and dynamic market such as the photographic industrywhich according to the Keynote website highlights estimates that the UK consumer photographic market was valued at £1.84bn in 1998, an increase of 12.5% on the previousyear. Sales have improved in recent years, following a period of decline during the recession inthe early 1990s, and growth has been driven primarily by an increase in sales of films and filmprocessing. Technological improvements have also boosted sales, although the effects of many of these developments have still to translate to increased sales in the marketplace. As aresult of this, the photographic market has become a rapidly growing and competitive marketwith the likes of Olympus, Canon and Kodak fighting it out to maintain their spot in the market.There are often times when companies become so focused on achieving competitiveadvantage that they often fail to follow the key Corporate Governance Codes set in place, andtherefore this can result in accusations of fraudulent activities which can have major effect on
companies’ credibility and profit margins.
One of the more recent defamations to affect the photographic market steamed from one of themarket leaders
Olympus, a well known Japan-based manufacturer of cameras, optics andrear ography products. In November 2011, Reuters reported the company has finally revealedthat for twenty years they had been hiding their losses on security investments, and the factthat their company shares had fallen to as low as 30%. The M&A payments included anexcessive $687 million advisory fee paid mostly to a now-defunct Cayman Islands firm (Philips.J, 2011) An independent panel issued a report to the newspaper the Record, how Olympus