Term Paper on Corporate Governance of Bangladesh in Comparison with USA and EU

This study primarily focuses on the Corporate Governance (CG) in Bangladesh, USA and EU which is the driving force for corporate performance and overall economic prosperity, a dire need of the day in view of the global market environment. It generates interest in the structure and the status of CG practices in emerging economies, particularly Bangladesh, which is recognized as one of the developing economies in the world. It is moving according to the world market changes in all dimensions and directions. The corporate sector in Bangladesh would remain changing and moving ahead as per the developments that were taking place in the other counterparts and developed economies like the US, UK and other parts of the corporate world. The notorious collapse of Enron in 2001, one of the America’s largest companies, has focused international attention on company failures and the role that strong corporate governance needs to play to prevent them. In fact, the developments in EU had tremendous influence on Bangladesh too. They triggered off the thinking process in the country, which finally led to the government of Bangladesh and regulators laying down the ground rules on corporate governance.
Corporate governance remains an obscure issue for business students. Most often it is amalgamated and confused with the issue of ethics. Although ethical behavior is expected from all the “actors” that take part in the corporate governance process, and specifically from directors and executives, corporate governance at its core is about the characteristics of a governing process and not about a particular behavioral trait.

The need for corporate governance arises from the potential conflicts of interest among stakeholders in the corporate structure. These conflicts of interest often arise from two main reasons. First, different stakeholders have different goals and preferences. Second, the stakeholders have imperfect information as to each other’s actions, knowledge, and preferences.

Corporate governance is an important effort to ensure accountability and responsibility and is a set of principles, which should be incorporated into every part of the organization. Though it is viewed as a recent issue, there is, in fact, nothing new about the concept. Because it has been in existence as long as the corporation itself-as long as there has been large – scale trade, reflecting the need for responsibility in the handling money and the conduct of commercial activities. In the wake of accounting, leadership, and governance scandals at such large companies as Enron, Tyco, and WorldCom, corporate governance has succeeded to attract a great deal of interest as it focuses not only the long term relationship, which has to deal with checks and balances, incentives for managers and communications between management and investors but also the transactional relationship, which involves dealing with disclosure and authority. Numerous works, studies, and researches have been conducted to enact principles, codes, and guidelines for ensuring good corporate governance systems and culture within the organizations.

Objectives of the Study
The broad objective of the research is to understand the state of corporate governance in Public limited companies - Financial and Non-Financial institutions and State Owned Enterprises in Bangladesh and the developed countries such as EU countries, USA, Canada etc. In particular, the study is expected to know the followings:

1) To introduce what corporate governance really entails.
2) To point out how corporate governance is the result of certain realities; shareholding patterns, economic and legal environments, cultural idiosyncrasies.
3) To sketch the key characteristics of the corporate governance models in use across the EU, US and in Bangladesh.
4) To explore how executive compensation is also an element that is influenced by the governance model in use.
5) The current practice of corporate governance in terms of accountability to its stakeholders.
6) How far the current practice of corporate governance passes the test of fairness.
) Whether corporate governance system in Bangladesh is transparent for all stakeholders in comparison with developed countries.