Some causes of corporate governance failures are deviations from leadership strategy, integrity absence, underqualified board members, and ineffective governance mechanisms. Other failures result from auditors, regulators, analysis ignorance of financial outcomes, non-audit committee and independent members, inconsistent responsibilities and duties distribution, and ineptitude management among others (Solomon, 2021). The impact of such corporate governance failures on international operations is that an organization loses potential shareholder trust and confidence. The losses signal shareholders cannot trust the firm’s governance, which erodes likely confidence potential shareholders might have in the business. Whenever potential shareholders believe an organization’s decisions are poor for its immediate future, they abstain from investing due to probable losses (Solomon, 2021). Shareholders may feel they might be misled or cheated, which jeopardizes their investment, failing to invest in the firm’s international operations.
In addition to potential shareholder loss, an organization loses control of its framework to maintain its objectives. It encompasses every management sphere from corporate disclosure and performance measurement relative to internal controls and action plans. Failures in corporate governance bring with them the challenge of poor policies incorporation within its operations (Solomon, 2021). From an international operation perspective, poor policy incorporation translates to inadequate accountability, risk management, ethical business practices, and transparency, which results in diluted power concentration (Solomon, 2021). The outcome of such engagement leads to shareholder interest misalignment between insiders and independent members. Moreover, the failures are responsible for poor corporate citizenship, resulting in lost control and rules in which directors, shareholders, and officers align their incentives (Solomon, 2021). With this comes the challenge of promoting financial viability, which minimizes or eliminates an organization’s opportunity for market participation in the international scene.
Reference
Solomon, J. (2021). Corporate governance and accountability. 5th Ed. Wiley,