The reasons for these corporate tragedies have pointed out to the lack of proper corporate governance systems as a major cause (Kaur 2000). This provided the impetus to the setting up of a high level finance committee in March 1998, formed to recommend measures to enhance corporate governance. The result of this was a 275 page Malaysian Code on Corporate Governance report that contained 70 recommendations for companies to follow. .
Although seen as a positive step, corporate governance would bear fruit only if it is adopted by organisations from within and enforced by the relevant authorities from outside the organisation. Enforcement is vital for corporate governance to yield the results it seeks. As exemplified by Elton Mayo in the "Hawthorne Effect" that the performance and behaviour of people improves when they are under a supervisory arrangement. (Bartol & Martin, 1998). Therefore, a certain level of policing is required for good corporate behaviour and governance. Scrutiny from regulators, the press, pressure groups, labour unions, employees and communities plays a positive role in contributing to a company's willingness to adhere to the guidelines and rules governing them. Although this may be true, the main motivation however should be the success that most companies would enjoy when reaping the fruit of adhering to a good corporate governance practices. As stated in the Horwarth 2002 Corporate Governance report, "An entity is much more likely to achieve its strategic and financial goals when corporate governance is given prominence within the organisation. Conversely, companies with poor corporate governance are more likely to under-perform in the long term." .
The fruit of effective corporate governance amongst others would be the enhancement of investor confidence and greater accountability that could lead to better profits. In the view of Michael Porter, "competitive advantage grows fundamentally out of the value a firm is able to create for its buyers" (Porter 1991) and good corporate governance which calls for a proper management of business is certainly a way of adding value to a firm.
