An investigation of corporate governance practices within the paint manufacturing industry: A case of Absolute Paints (Pvt) Ltd (January 2010 - July 2012)

Abstract

The research study was an investigation of corporate governance practices within the paint manufacturing industry. The study focused on Absolute Paints Private Limited over the period January 2010 to July 2012. Quite a number of firms collapsed or suffered serious operational challenges due to dearth of or no internal controls and risk management systems in place. The study aimed to prove or disprove the proposition that Absolute Paints Private limited does not have good Corporate Governance systems. To appreciate the key concepts of corporate governance the researcher reviewed literature on corporate governance from work by Sir Cadbury, the Sarbanes Oxley Act of the USA, Combined Code principles from UK, the Cromme Code from the Republic of Germany, King reports from Republic of South Africa and RBZ report on corporate governance. A qualitative and quantitative research design was used and data collection was done using a self-administered questionnaire as the research instrument. Non probability sampling technique was used to select the respondents that participated in the study. A sample of forty was used which was composed of board of directors, CEO, line managers and supervisors. Twenty seven participants responded in the study, representing 67.5% response rate and this presented a reasonable percentage to validate the findings. The major findings were that, the composition of the company board of directors was not balanced and there were no remuneration and nomination committees. There was also poor risk management. The researcher recommended that the company needs to have a balanced board composition, introduce an internal audit department, putting in place a structure of reviewing and authorisation of financial reporting and disclosure as well as introducing integrated reporting and produce a detailed standard operating procedure for the organisation. There is also need for further study on how boards of directors of paint manufacturing organisations can adopt King Code III integrated reporting and disclosure to attract foreign direct investment.