This research work is an evaluation of the quality of Corporate Governance within Diageo plc and the impact on its shareholders and its directors. This involves the examination of the annual reports of Diageo plc and aligning it with the Uk Corporate Governance Code as updated and published by the Financial Reporting Council (FRC). Cadbury Report of 1992 defines Corporate Governance as the system by which companies are directed and controlled in the interest of the shareholders and other stakeholders (Kaplan, 2010). Direction is guiding and motivating others to work effectively to achieve the organisations goals and objectives (Nickels et al. 1996, p. 214). Control is the process by which managers assure that resources are obtained and used effectively and efficiently in the accomplishment of the organisations objectives (Anthony R. 1965). Freeman (1984) defined a Stakeholder as: any group or individual who can affect or is affected by the achievement of the organizations objectives. Corporate Governance guidance was brought up in response to a series of high-profile corporate collapses (like Maxwell, Enron and WorldCom), along with the regular reports of shareholders funds being misappropriated by unscrupulous directors. Also coupled with the common perception that executives of large corporations are driven by self-interest, with little regards to the interest of the corporation and other stakeholders and finally to prevent directors from the wrongful use of the veil of incorporation. Aside Corporate Governance, a number of laws, rules and guidance has also been put in place in response to these scandals. In some jurisdiction, CG Codes have been infringed into law, for instance the US Sarbanes-Oxley act of 2002(SOX). This Act affects all companies listed in the US stock exchange (Julian Fisher, 2007)
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