Corporate Governance Structure and Mechanism
With the ramified economic changes and strengthen corporate governance practice, each and every Organizaiton needs to increase the effectiveness of its Corporate Governance Structure and Mechanism and sustainability reporting in long run. This report focused on the Corporate Governance Structure and Mechanism and corporate governance compliance of the Star Entertainment Group Ltd. In this report, discussion will be made on the legal corporate governance of company, structure of the board of directors and Strength and weakness of the structure, Corporate Governance Mechanism and corporate governance compliance of the Star Entertainment Group Ltd.
The Board of Directors and management of the company support the principles of corporate governance for the long sustainability of the company. For the regularization of corporate governance principles proper processes and practices have been established to meet the essential needs of the group. Company is reviewing all the practices regularly and taking into account all the applicable legislation and standards. It is complying with all the recommended principles of ASX to maintain on-going compliances. It is laying down solid foundation for management and oversight by specifying them their roles and responsibility. They are assuring the effectiveness of arrangement for the better governance of the group. The quality of the executive team and its appropriateness of organisational structure are adequate with its proper control, procedures, policies and processes (Ravi, & Saxena, 2015). They have an oversight vision for their targets and objectives with their strategic direction and performance of the group. The code of conduct and other relevant policies are included in the induction program. Company has Whistle-blower system for any misconduct or anonymous crime and reporting of such acts to prevent the crime or misconduct. Company has its policy for all the directors, contractors and employees regarding trading in securities. They have a proper disclosure and investor communication procedure to report to the ASX under its listing rules. To respect the rights of the shareholders they provide every needed information on the website and conduct an investor relations program which facilitate and encourage participation of shareholder in meetings (Mehrotra, & Mohanty, 2018). However, due to the increased complexity and compliance program, it has failed to establish harmonization in its domestic and international reporting framework. Company first needs to focus on complying with the international rules and regulations in its reporting frameworks and if in case the domestic rules are violated due to the international reporting frameworks then these international rules will override the domestic laws due to the international business functioning of company.
Strengths of Corporate Governance Mechanism
Strength of the structure and Mechanism
The corporate governance mechanism has numerous strength which helps to thrive the market place. These strengths help to penetrate new market and protecting existing markets. They are continuously producing new products and maintaining their product innovation and maintaining a successful track record. The consistency of the quality of the products is scaling up and down as per market demand due to Automation of industry. They have successfully integrated number of companies in technology to streamline its operation and to build supply chain by keeping track record of mergers and acquisition of the firms. They have maintained their high customer satisfaction and brand equity among its potential customers (Choong, & Leung, 2015). They have invested a huge to build a strong brand portfolio. They have good returns on their capital expenditure by building new revenue streams. They have reliable suppliers for the continue supply of raw material. They have highly skilled workforce through its learning and training program, equally they have motivation to achieve more. Government has also opened up an opportunity for the procurement of its products in the name of green drive. It has started new sales channels which will help in knowing the customer better by using big data analytics. They have pipelined new environmental policies which will help in gaining market share with new product category (Jolson, 2015). In context with the board of directors, company has hired more than 1/3 directors who are independent and having no pecuniary relation with the company. These directors take their decisions under the board resolutions (Grais, & Pellegrini, (2016). It is analyzed that company has also followed international reporting compliance program in its business which may strengthen the overall outcomes and efficiency of the business. It is considered that company has maintained the proper transparency in its business which has also resulted to aligning the interest of the stakeholders with the organization development (Choudhary, Merkley, & Schipper (2018). It will also help company to increase the overall outcomes and brand image of company on international level. The strong legal compliance, increased business transparency has resulted to the strong Corporate Governance Mechanism and corporate governance compliance of the Star Entertainment Group Ltd. It will also help company to keep the business more sustainable and effective in long run (Ni, & Van Wart, 2015).
Weaknesses in governance
Star Entertainment is improving continuously to overcome its weaknesses in a best possible way. They are continuously making strategy for this. The main reason where they are lagging behind is their forecasting for their product demand and it is leading to high inventory in channel. They are not able to tackle the challenges given by new entrants and they are losing market share in niche category due to the increased legal compliance and issues related to Corporate Governance Mechanism and corporate governance compliance… They are limiting to adjacent product segments as they are compatible with present business models only (Ni, & Van Wart, 2015). Their financial planning is not proper or efficient due to the increased governance penalties and issues in the governance program of company. They need to investment more in new technologies to process across the board. Their investments are not as per the vision of their company. Consumers are changing their buying behaviour towards online channel they need to be more strengthened in technological way. These increased business challenges have also made its data privacy policies and governance program weak. They are lacking in their innovative product range which swings the sales numbers. Their pricing strategies are leading to serious pressure on its profitability. They are isolating their trend in America which is negatively impacting the international sales. They are not aware of liability laws of every country they are dealing in which is creating liability claim in those markets (Hennig & Houston, 2017). The main weakness of the corporate governance of company is based on its legal experts.
Weaknesses of Corporate Governance Mechanism
Compliance with the ASX corporate governance principles and Recommendations with 2014 amendments
Corporate governance principles give in ASX focused on keeping business more transparent and sustainable in long run. There are main eight corporate governance principles given by the ASX for the listed company which they will have to comply in order to keep the business more sustainable in long run. It is analyzed that if company could mitigate the accounting and legal compliance issues then it will also avoid the possible issues related to penalties and charges (Choong, &Leung, (2015). It is analyzed that company has also hired more than 1/3 independent directors in its board of directors who will be keeping the close look on the corporate governance and financial transactions of company. In addition to this, audit committee and other concerned committees are indulged in making the business more transparent and effective throughout the time Star Entertainment Group Ltd has also followed ethical business code of conduct in its business reporting frameworks which will keep its business more beneficial for its stakeholders. If company wants to make its business more effective than it needs to focus on aligning the interest of the stakeholders with the organizational development. The transparency is also one of the major factors in AX listing compliance. It is considered that if company takes board management decision then the same will be disclosed to Australian stock exchange with a view to maintain the transparency in the business (Francis, & Zheng, 2010).
A higher debt poses a threat to company’s profitability in downturn. Star Entertainment has underperformed in the consumer service industry in their average growth earnings. There should be material exposure to the social, economic and environmental sustainability program. The board’s skill matrix should indicate the skills, expertise and experience that are necessary for the optimal performance of the board. Adoption of recommendation of ASX listing was slightly lower than previous year (Christensen et. al. 2015). In addition to this, company have also been facing issue in making the timely disclosure which may negatively impact the business in long run. It is analysed that company should focus on setting up the effective legal compliance department if it wants to keep its business more sustainable and effective.
It is analyzed that in the recent sustainability reporting of the Star Entertainment Group Ltd it is reflected that company has invested AUD $ 112 million in its CSR activities with a view to align the interest of the stakeholder’s with company’s mission, and motivations for issuing a sustainability report. An analysis shows that Star Entertainment is not able to meet its upcoming commitments and short term assets.
Compliance with ASX Principles
Scope of the sustainability report
Company has showed its compliances towards ASX corporate governance principles by laying down foundation for management and oversight. To overcome the previous debt issues they have structured its financial board to fulfil the commitments. They are promoting ethical and responsible decision making by establishing a code of conduct. The main scope of the sustainability reporting is to strengthen the transparency and ethical business functioning. They have structures safeguard integrity in their financial reporting by establishing the audit committee (Francis, & Zheng, 2010). This committee helps management to make changes in Corporate Governance Mechanism and corporate governance compliance of the Star Entertainment Group Ltd so that it could easily establish the harmonization in its reporting and legal laws program. Timely disclosures are been made concerning the company for the better connection with the shareholders.
Address the GRI content and quality principles,
They are establishing written policies to ensure the accountability at senior executive level and disclosure policies and summarise them (Shimeld, 2017). They should respect the shareholders and facilitate them effective exercise of their rights. It can be done by using electronic communication process in organization (Foster, & Shastri, 2010). They should recognize and manage the risk involved in the market with its oversight vision and internal control. They should remunerate fairly and responsibly by establishing remuneration committee. They should provide all the information on the company’s website including the governance and entity.
Key achievements in sustainability initiatives
It is analyzed that company has showed its compliances towards ASX corporate governance principles by laying down foundation for management and oversight although the main focus of company that should be on the setting up strong corporate governance mechanism which could also strengthen ethical business compliance of company. In addition to this, in context with the stakeholders, in its CSR report, it has reflected that the star group operate on its Dividends Reinvestment plan for its final dividend. Board considers it appropriate to maintain mix of skills, experience, diversity and knowledge in the membership of the board to add value to the needs of the stakeholders and society.
Main findings in the assurance or review of the sustainability report
All the managers and directors need to review annual risk for making next year’s annual program. In addition to this, In the CSR and sustainability reporting of company it is found that company has faced high penalties from the Australian stock exchange due to its failure to comply with the listing agreements and laws. It will not only increase the overall costing of the business but also make business more risky in context with the sustainability (Grais, & Pellegrini, 2016).
Board of Directors
Conclude with an overall evaluation
They conduct induction programme and supporting plans to strengthen its CSR activities for its stakeholders. In addition to this, proper disclosure is also made in its CSR report about the CSR activity and invested funds. .It focuses on the transparency and ethical legal compliance program is the base to strengthen the corporate governance mechanism of Star Company and increasing the overall ethical business sustainability in long run (De Janasz, & Whiting, 2009).
Conclusion
After assessing all the detail and information of the Star Entertainment Group Ltd, it could be determined that the management indulged in the legal compliance program of company should undertake proper corporate governance mechanism in its reporting framework. By hiring the separate legal compliance department width the ethical and sustainable business practice it could easily strengthen the legal compline program and avoid the possible. Now in the end, it could be inferred that company has established strong Corporate Governance Mechanism and corporate governance compliance in its reporting program which will not only align the interest of the stakeholders but also strengthen overall brand image in long run. It is inferred that The Board of Directors and management of the company needs to align the principles of corporate governance for the long sustainability of the company.
References
Christensen, J., Kent, P., Routledge, J., & Stewart, J. (2015). Do corporate governance recommendations improve the performance and accountability of small listed companies?. Accounting & Finance, 55(1), 133-164.
De Janasz, S.C. & Whiting, V.R., (2009). Using service to transform learning: re-scripted ABCs for our changing environment. International Journal of Organizational Analysis, 17(1), pp.60-75.
Foster, B.P., & Shastri, T., (2010). Impact on pre-& post-Sarbanes Oxley users’ perceptions by incorporating the auditor’s fraud detection responsibility into the auditor’s internal control report. Research in Accounting Regulation, 22(2), pp.107-113.
Francis, J.& Zheng, C., (2010). Learning vicariously from failure: The case of major league soccer and the collapse of the North American Soccer League. Group & Organization Management, 35(5), pp.542-571.
Grais, W. & Pellegrini, M., (2016). Corporate governance in institutions offering Islamic financial services: 45(5), pp.42-57.
Hennig-Thurau, T., & Houston, M. B. (2017). Creating Value, Making Money: Essential Business Models for Entertainment Products. In Entertainment Science 32 (5), pp.542-571.
Jolson, M. (2015). Congress Killed the Radio Star: Revisiting the Terrestrial Radio Sound Recording Exemption 34(5), pp.52-57.
Mehrotra, S., & Mohanty, B. (2018). The Effect of Corporate Governance Structure on the Performance of Companies Listed in India. IUP Journal of Corporate Governance, 17(1), 7-23.
Ni, A. & Van Wart, M., (2015). Corporate Social Responsibility: Doing Well and Doing Good. In Building Business-Government 62(5), pp.52-59
Ravi, K., & Saxena, R. (2015). Celebrity Star Association for Tacit Endorsement of Brands in Entertainment Context-An Experimental Study. Asia Pacific Journal of Management & Entrepreneurship Research, 4(1), 67.
Shimeld, S., Williams, B., & Shimeld, J. (2017). Diversity ASX corporate governance recommendations: a step towards change?. Sustainability Accounting, Management and Policy Journal, 8(3), 335-357.
Choong, K.K. & Leung, W.Y., (2015). Auditor remuneration, corporate governance and auditor independence: 2nd ed, Europe: Pearson.
Choudhary, P., Merkley, K. J., & Schipper, K. (2018). Auditors’ Quantitative Materiality Judgments: Properties and Implications for Financial Reporting Reliability. 28(2), 44-82
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