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Journal cover: Corporate Governance

Corporate Governance

ISSN: 1472-0701

Online from: 2001

Subject Area: Business Ethics and Law

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Corporate governance in the financial services sector


Document Information:
Title:Corporate governance in the financial services sector
Author(s):Morrison Handley-Schachler, (Lecturer in Accounting, at School of Accounting and Economics, Napier University Business School, Edinburgh, UK.), Linda Juleff, (Senior Lecturer in Economics, at School of Accounting and Economics, Napier University Business School, Edinburgh, UK.), Colin Paton, (Research Associate in Accounts and Economics, at School of Accounting and Economics, Napier University Business School, Edinburgh, UK.)
Citation:Morrison Handley-Schachler, Linda Juleff, Colin Paton, (2007) "Corporate governance in the financial services sector", Corporate Governance, Vol. 7 Iss: 5, pp.623 - 634
Keywords:Corporate governance, Financial services
Article type:Conceptual paper
DOI:10.1108/14720700710827202 (Permanent URL)
Publisher:Emerald Group Publishing Limited
Abstract:

PurposeThe purpose of this paper is to overview the goals of corporate governance in the financial services sector from a theoretical perspective. This sector has experienced some high profile corporate scandals, including BCCI, Barings Bank, and Equitable Life. Yet the UK's Combined Code on Corporate Governance does not give any special prominence to the corporate governance issues involved in this important and idiosyncratic business area.

Design/methodology/approachFirst, the broad parameters of corporate governance are discussed, from a theoretical perspective. From this particular characteristics are derived applicable to the financial services sector. These issues are examined and the extent to which they have been addressed by contemporary academic or policy-related studies is considered, and also how they are related to the activities of the main bodies responsible for external oversight.

FindingsThe main attention of this paper is banks and a key issue arising is that the typical structure of their balance-sheets – high leverage, and a mismatch in their assets and liabilities, mean that it is imperative that they keep lenders' confidence, and imply a wider duty of care for bank directors. External regulators (FSA) and auditors have vital oversight functions, which should encourage sound governance practices. One avenue of future research would be to assess the effectiveness of compliance in the UK, given that financial companies have obligations concerning both FSA requirements and Combined Code provisions.

Originality/valueSome key issues pertaining to corporate governance in financial services are addressed, highlighting their significance, to encourage further investigation by academics and practitioners in the field.



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