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be inferred that managers willing to assume the risks associated with a professional board are better able to generate higher returns to shareholders. (Cadbury.A .2002)

The analysis above suggests Tesco operates a good corporate governance framework. As such, investors are provided with a reassurance that their investments are being managed properly. We should therefore expect a good financial performance from the company.

Based on the company's annual report, growth on 2007 showed an 11.1% increase on group sales, including VAT. Group profit before tax increased to 5.7% while diluted earnings per share was up by 14.2%.

Underlying group profit before tax was up by 11.8% while underlying diluted earnings per share increased by an impressive 20.8%. Dividend per share was also up by 13.1%.

Tesco share price increased by an impressive 45% in 2008, (Figure 1) but it gradually declined during the year. Total shareholder return also followed a similar trend, increasingly by nearly 50% over the last 3 years and then falling down during 2008. (Figure 2). This decline can be explained by the current credit crisis. In addition, dividend prices rose consistently over the years.

In comparison with one of its main competitor, Sainsbury's, Tesco is performing well better in all areas. While the former's sales increased by about 3%, Tesco's increase was nearly 3 times as much. In addition, the company's profit before taxation is nearly 5 times as much.

Based on Broker forecasts from the annual report, Tesco's financial performance will continue to increase to ￡62540.60 millions in 2011. Obviously, for the company to continue its impressive growth, it needs the backing of its stakeholders, who ultimately rely on good corporate governance.

The financial accounts have been audited by the external auditors, who have provided an unqualified opinion. Hence, we can deduce that creative accounting has not been used to conceal facts from stakeholders.

My conclusion, based on the above analysis, is that there is a link between corporate governance and financial performance, though it is difficult to measure or quantify.

10.0 CONCLUSIONS AND RECOMMENDATIONS

Successful businesses are those that are transparent in their transactions and behave ethically. Nowadays, it is also as important to have a good corporate governance framework in the organisation.

Tesco, the UK's biggest retailer, seems to operate as a good corporate citizen. It has complied with the combined code in all respects and its financial statements are prepared in accordance to applicable accounting and legal rules. As a result, shareholders are benefitting from increased return on their capital, more people are getting a job at the company, loan providers are happy to lend to it and customers seem to be loyal to the company, which is reflected in increased sales revenue over the years.

However, there is a group who is not happy at all about the operations of the company; the local shops. Tesco has been expanding continuously a本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。