Corporate Governance Of A Company 's Shareholders, Board, The Executive Management And Other Stakeholders Essay

Corporate Governance is the system of rules, practices and processes in which a company is controlled and directed. “It essentially involves balancing the interests of the many stakeholders in the company.” (Investopedia). These can include shareholders, management, customers, suppliers, financiers, government and the community depending on the type of company. It provides the framework for attaining any company’s objectives. As western culture transitions into a more globalized economy, a set of standards enhancing corporate character should be evaluated. These standards are created within an organization to add long term value for the shareholders, and should be managed on a regular basis to achieve desired goals that

Corporate governance is the control of the strategic direction of an organization by the board of directors through exercising their power and influence as the stakeholders. It may also be explained as policies, processes, customs and laws that are utilized to direct, control and administer an organization (Feld & Ramsinghani, 2013). In an organization, pursuing the set goals should be done according to a set of policies and processes that are as fundamental as the federal laws that govern the running of any business or organization. These formal duties and processes are upheld by the board of directors and include the duty of loyalty and duty of care as well as formation of committees which may include the audit committee, nominating

The World Bank has defined corporate governance as ‘the manner in which power is exercised in the management of a country’s economic and social resources for development’ the corporate governance relates to how well an organization is managed to ensure its sustainability as a going concern. Governance is where organizations are controlled and directed. Moreover it is the procedures and rules for decision making on corporate affairs, to ensure success while maintaining the right balance with the stakeholders’ interest.

This essay is going to talk about the relationship between corporate governance principles and the business development. By comparing the HIH Insurance Limited and the Apple Inc. to find out how effective the corporate governance principles help the companies to achieve their goals.

Corporate governance is the relationship of large quantity participants of the corporations. Those participants usually occupy the important positions，which determine the performance and strategy of the corporations. The participants include shareholders and stakeholders, the company’s management that led by CEO, and the board (Robert and Nell, 2001). This definition showed different perspectives of corporate governance. First, corporate governance almost concentrate on the top management of the companies, although sometimes it may concern further down to the subsidiary management or the corporate insurance of the company. Second, it showed the responsibilities of each position, and showed each position responsibility for what. Third, corporate governance justify the benchmark about holding someone accountable and corporate governance also describes the process of how a corporation identifying the benchmark (Steger and Amann, 2008).

In the last decades years, the corporate governance is one of a substance that concern of an increasing of hight profiles corporate disgraces and lack of successful.The definition of Corporate governance can be as the process and structure that use for directing and hanging correctly business and could relate to affair of organization with earliest objective of ensuring its protection, dependability and improve its shareholder value.This mechanism characterizes the partition of power and achievement of accountability, transparency, fairness and honesty between board of directors, management and shareholders and in the same measure of safeguarding the interests of depositors and other stakeholders. Jones and Pollitt (2002) illustrated that corporate governance is the way the company’s board of directors is organised and functions.

Issues regarding corporate governance of companies are growing in importance. Corporate governance involves ‘the system of rules, practices and processes by which a company is directed and controlled’ (Investopedia, 2014). A company should treat all its stakeholders with respect and integrity. A controversial branch of governance is the extent to which executives gain compensation. This may or may not reflect their performance or be within the best interests of their shareholders; who are the owners of the company. Since the formation of the limited company, whereby management is separated from ownership an agency problem has emerged, as executives and other directors’ aims may not be in line with shareholders’ interests. Different

(Fernando, 2009) According to Cochran and Wartick (1988), corporate governance is an umbrella term that covers many aspects related to concepts, theories and practices of boards of directors and their executive and non-executive directors. Corporate governance concentrates on the relationship between boards, stockholders, management regulators and other stakeholders. (Maaseen, 1999) Monks and Minow (1995) define corporate governance as a relationship among various participants in determining the direction and performance of corporations. According to the World Bank, corporate governance is the blend of law which enable the corporation to attract financial and human capital, perform efficiently and thereby perpetuate it by generating long-term economic value for its shareholders while respecting the interest of stakeholders and society as a whole. The principle characteristics of an effective corporate governance is transparency; the disclosure of relevant financial and operational information and internal processes of management. More characteristics of efficient corporate governance involves protection and enforceability of the rights

Corporate governance applies to every aspect of the organization; it sets parameters for everyday transactions, employee relationships, rights and responsibilities, action plans, internal control, performance measures and corporate disclosure. it is the protocols which are implemented at any organization so that right and responsibilities are clear, no one’s interest is harmed or neglected and in case of a violation or complaint clear rules are present to judge the matter.

Integration and globalization of financial markets and a gush of corporate scams have led to the fast developments within the field. With the continuous growth in the foreign investments in India, the international investors would assert that the corporations in which they have interest should follow a “Code of Corporate Governance”. In such a scenario, Indian corporates cannot afford to disregard the best corporate governance practices since India is a developing country.

A dynamic and fundamental view of business nowadays is presented in corporate governance. As a term, governance comes from a Latin word gubernar means to guide; describing the main purpose of modern governance which is guiding relations between different counterparties. That emphasizes directing function rather than monitoring function. The definitions of corporate governance always concentrate on shareholders’ relations with their companies. The new definitions of governance mention on accountability to various stakeholders as a significant role of governance. Successful business is badly needed for corporate governance as well it is significantly for social and environmental benefits, which cannot be ignored. Global financial crisis and companies collapsing caused of a weak governance system have spotlighted the need of improving corporate governance. The crises has pushed countries to issues regulations in order to protect financial markets such as Sarbanes-Oxley 2002 in United States of America and Higgs report 2003 in United Kingdom presenting quick respond on financial crisis and failures of corporate governance. The lesson of current crisis requests from researches to look on the structure of incentives and on a poor controlling system. That led to review corporate governance concepts and to modify and issue new recommendations to improve governance practices such

Implications: This study is expected to make considerable contribution towards the development of an effective system of corporate governance or for further enhancement of the existing system in order to bring further improvements in country’s economic performance. The results of this study will help the researchers in identifying the major problems concerned with the effective functioning of businesses and to develop effective strategies to deal with the problem.

Corporate Governance delivers the guidelines as to how the organisation can be directed and controlled (Cadbury, 1992) . The corporate governance role is not concerned with the day to day business of the company, their main duties associated with giving overall direction to the company that can fulfil organisational goals and objectives (Tricker, 1984). Interestingly Walker Review (2009) defined, the role of corporate governance is also to protect and develop the interest of stakeholders by setting up a strategic direction (Walker, 2009)

Corporate governance refers to a set of rules, practices and processes that control a company and which provide it with a direction. It helps to ensure a balance between the different

This was adhered to by a comparable code by the Central Bank of Nigeria in 2000 (CBN, 2006) to deal with corporate governance practices in Nigerian financial institutions. Nevertheless, lessons from the corporate collapses and also losses in the last couple of years with respect relative to banks like Intercontinental Bank Plc, Bank PHB Plc, Societe General Bank, Afri-Bank Plc as well as Oceanic Bank Plc have actually highlighted the function, corporate governance techniques could play in keeping viable organizations and in protecting stakeholders rate of interests. The majority of the business failings that were recorded in the Nigerian banking are instances of the dangers positioned by corporate governance failures.