Question

Discuss how International Corporate Governance and Control is distinct. What areas are different from a purely domestic company and why?

Answer 1

Corporate governance is about how firms should be governed so that they are run effectively Governance system are not uniform across counties. They are shaped by a variety of factors that are inherent to the business environment. These factors include Efficiency of local capital market, Protections afforded by legal system , Reliability of accounting standards, Enforcement of regulations and Societal and cultural values.Governance systems are diverse because the above mentioned factors combine in different ways in different countries.

Domestic firms operate mostly or completely within one country. They may import supplies or export products , but these activities normally represent a comparatively small share of total business activity. Domestic companies are governed by that particular country's securities laws. Their financial reports are normally constructed according to generally accepted accounting principles(GAAP).

International firms are headquartered in one country but maintain significant investments outside the country and have geographically diverse profit centers The operations and governance of the company are are typically determined by that country's laws. Subsidiaries may be governed according to policies dictated by their host countries. Accounting structure in many jurisdictions outside that country are determined by the International Financial Reporting Standards (IFRS). Any specific differences in accounting or governance between foreign subsidiaries and the parent company shpuld be disclosed in the parent company financial reports.