Literature Review:

In September 2003 a study was conducted on impact assessment of the code of corporate
governance 2002. The main objective of the study was to evaluate the extent and effect of the
implementation of the Code of Corporate Governance 2002 on listed companies. The basis of the
study was to identify operational efficiencies and identify problems that have resulted after the
implementation of the Code. A survey was conducted to assess the execution of the Code of
Corporate Governance, highlight the progress made in terms of organizations operational of
problems being faced by different corporations in implementing the Code. The survey consisted
of A Questionnaire mailed or emailed to 95 listed companies, Telephone interviews and
conversations with various CEOs and CFOs of different corporations, Personal visits of different
companies, Meetings with directors of Karachi Stock Exchange and exchange of view with the
Presidents of Lahore Stock Exchange and Islamabad Stock Exchange personally or through email
, Detailed meetings with head of audit firms who have played an formulation of the Code of
Corporate Governance by ICAP.
The findings of the Questionnaire are 1) Composition of the Board of Directors should be on
average of the Board 9 directors, comprising 3 Executive Directors and 6 Non-Executive
Directors. 2) For Duties and Responsibilities companies stated that the Board of Directors has
formulated corporate strategy and announced significant policies, and ensured implementation of
an effective system of Internal Control. All companies declared that a complete record of
particulars of significant policies is being maintained. 3) On average 5 Board meetings per
company took place during the last year. 4) Most companies responded that the Board had
appointed the CFO after approval. 5) All companies, who responded, declared that quarterly un-
audited financial statements/ accounts are circulated to the shareholders after approval by the
Board of Directors within 30 days. 6) Majority of the audit committees reported that the audit
committee consisted of 3 members, containing one Executive Director and two Non-Executive
Directors. 7) On average in-house audit department of an organization has 3 members, although
most of the companies reported that the in-house audit department consisted of 1 member only. 8)
All companies declared that the External Auditors have been appointed in conformity with the
guidelines stated in the Code of Corporate Governance. 9) All companies declared that the
company has published and circulated a statement along with their annual reports to set out the
status of their compliance with the best practices of corporate governance. This survey reveals
that implementation of the Code has resulted in major organizational and corporate culture
improvements, as compared to the situation established prior to the implementation of the Code.

In June 2004, Andrew corn ford discussed about recent corporate scandals Enron and internationally
agreed principles for corporate governance and financial systems which are a major constituent of
current initiatives to support the international financial planning and contain corporate governance
.This paper contains an account of the collapse of corporate governance in the most recent
scandals, that containing the collapse of Enron, where there were not only conflicts with standards
for good corporate governance but also abnormally extensive use of refined techniques and
dealings to manipulate the firms financial reports
This discussion serves as a background to a discussion of policy initiatives in the result of Enrons
collapse and other corporate scandals at the international level and most importantly the
strengthening of the OECD Principles of Corporate Governance where the response has
comprised the far-reaching Sarbanes-Oxley Act whose effects will also be felt outside the United
States due to global importance of the countrys financial markets. The paper also points to
relations between policy responses containing corporate governance proper and initiatives about
international financial regulation. The paper also contains reflections on other models of corporate
governance and of some of the implications of the weaknesses of the much publicized United
States model highlighted by recent scandals for the development and change of corporate
governance in emerging-market and other developing countries.

In September 2004, another research was conducted which evaluate the practical corporate
governance mandates of the Sarbanes-Oxley Act of 2002 that is informed by the related observed
accounting and finance literature and the political dynamics that formed the mandates. The
research was done on evaluating the Substantive Corporate Governance Mandates
in SOX, the Political Economy of the SOX Corporate Governance Mandates
and Policy Implications.

The paper concluded that SOXs corporate governance provisions should be uncovered of their
necessary force and reduced optional. Other countries, such as the members of the EU who have
been continually reviewing their corporation codes, would be well advised to avoid Congress
policy blunder.