In 2018, Carlos Ghosn, the chairperson of Nissan Motor Co., Ltd. (Nissan), was arrested for alleged misconduct and criminal offences related to underreporting remuneration and misrepresenting annual disclosures. Detailed investigations revealed similar misrepresentations by the company’s chief executive officer (CEO) Hiroto Saikawa, who was forced to resign. The actions of senior officials left a deep stain on Nissan’s reputation, causing investors to question the effect of corporate governance at Nissan—and by extension, at similar companies across Japan and the world. As details of the scandal unfolded, Nissan suffered negative public repercussions. Its share-based incentive systems, excessive focus on profitability, and cost-cutting measures had caused deviations from normal risk management procedures, resulting in the production of poor-quality vehicles and thus vehicle recalls. Consumer trust in the company dropped, as did sales and profitability figures, with a continuous fall in the company’s stock. The company’s new CEO and board of directors were left to make amends for the company’s future. They needed to determine how to strengthen the company’s leadership and governance structure as they worked to make Nissan sustainable and profitable once again. Describe how to minimize the occurrence of the above corporate governance issues by explaining ONE (1) of the available corporate governance models in terms of its application.
In 2018, Carlos Ghosn, the chairperson of Nissan Motor Co., Ltd. (Nissan), was arrested for alleged misconduct and criminal offences related to underreporting remuneration and misrepresenting annual disclosures. Detailed investigations revealed similar misrepresentations by the company’s chief executive officer (CEO) Hiroto Saikawa, who was forced to resign. The actions of senior officials left a deep stain on Nissan’s reputation, causing investors to question the effect of corporate governance at Nissan—and by extension, at similar companies across Japan and the world. As details of the scandal unfolded, Nissan suffered negative public repercussions. Its share-based incentive systems, excessive focus on profitability, and cost-cutting measures had caused deviations from normal risk management procedures, resulting in the production of poor-quality vehicles and thus vehicle recalls. Consumer trust in the company dropped, as did sales and profitability figures, with a continuous fall in the company’s stock. The company’s new CEO and board of directors were left to make amends for the company’s future. They needed to determine how to strengthen the company’s leadership and governance structure as they worked to make Nissan sustainable and profitable once again.
Describe how to minimize the occurrence of the above corporate governance issues by explaining ONE (1) of the available corporate governance models in terms of its application.
Corporate governance:-
Corporate governance is the term used to describe the system of rules, practises, and policies that govern and control a firm. Striking a balance between the needs of a company's different stakeholders, such as shareholders, senior management, customers, suppliers, financiers, the government, and the local community, is typically the goal of corporate governance.
The framework for attaining a company's objectives is provided by corporate governance, which covers practically every area of management, from action plans and internal controls to performance evaluation and corporate transparency.
Note:- I'm generalizing the solution
Step by step
Solved in 2 steps
