Good Corporate Governance Practice Is Beneficial For Firms, Its Stakeholders And Whole Economy

“While corporate governance may not dictate the economic prospects of developing countries, it certainly plays an integral role in shaping them.”

Corporate governance in itself has no single definition but common principles which it should follow. For example in 1994 the most agreed term for corporate governance was “the process of supervision and control intended to ensure that the company’s management acts in accordance with the interest of shareholders” (Parkinson, 1994)1. Corporate governance code is not a direct set of rules but a self-regulated framework which businesses choose to follow. This code has continued to change in the past 20 years in accordance with what is happening in the business world. For example the Enron scandal caused reform in corporate governance with the Higgs Report which corrected the issues which were necessary. Although it does not quickly fix problems, it gives a better framework to

Phenomenal growth of interest in corporate governance has emerged in recent years. The body of literature on the subject has grown markedly in response to successive waves of large corporate failures. Furthermore, there have been numerous attempts to define what constitutes ‘good corporate governance’ and to provide guidelines in order to enhance the quality of corporate governance.

This essay seeks to determine how the reforms from 2014, 2015 and dual system from 2003 influenced companies’ performance and provides the evidence that transparent corporate governance leads to higher performance of the firm. In order to respond to the question, it is first necessary to examine collected empirical evidence from Tokyo Stock Exchange and further analyze using Stata.

Kluyver, C. (2013). A primer on corporate governance (2nd ed.). New York, NY: Business Expert Press.

Corporate governance refers to ‘the ways suppliers of finance to corporations assure themselves of getting return on their investment’ (Shleifer and Vishny, 1997: 736). Corporate governance discusses the set of systems, principles and processes by which a

TABLE OF CONTENTS 1. EXECUTIVE SUMMARY……………………………………………. 3 2. INTRODUCTION ……………………………………………………... 4 3. GROWING OUT OF FINANCIAL CRISIS…………………………. 4 4. INITIATION OF GLOBAL FINANCIAL CRISIS…………………. .5 5. CRITICAL ANALYSIS OF US POLICIES AND IRREGULARITIES OF FINANCIAL MARKET……………………………………………6 6. CORPORATE GOVERNANCE

Corporate governance mechanisms are developed to ensure that the managers of the firm act in the best interests of shareholders/owners. Since the global financial crisis, there has been much attention placed on the importance of corporate governance, specifically on the banking sector. Good corporate governance is a significant factor in the publics’ perception of its corporate social responsibility (Young & Thyil, 2014). The duties and responsibilities of a company’s board of directors and the way they can manage their relationships with stakeholder groups and internal stakeholders can be described as a corporate governance (Pass, 2004). In the recent article “Good Corporate Governance is Good for Bank’s Bottom Line” published by The Conversation (Academic Rigour, Journalistic Flair) will be discussing the issues raised in relation to corporate governance with a brief summary of the articles.

The governance mechanism could be used by the shareholders instead of just monitoring the activities of the managers to motivate the managers that they act in the best interest of the shareholders.In fact, they should apply performance-based incentive plans based on compensating the managers’ performances on stock price changes. In addition, they can intervene directly as institutional investors in order to meet with the firm’s management and give recommendations concerning the actual operations, or sponsor a proposal for voting in the annual meetings. Another possible governance mechanism is to threat the managers through firing for poor performance or by a takeover, as poor performance companies have generally an undervalued stock, which attracts many companies for a hostile takeover, which means high chances of dismissal for the actual managers.

I prefer to research this area because corporate governance has played the important role for most successful enterprises, especially for family firms. Furthermore, small and medium size enterprises（SME’S）has played a vital role in the economic development of most countries, such as in Taiwan and the U.K.. Moreover, building enterprises and construction firms are always playing the one of an important industry in every country around the

firms with lower insider ownership, consistent with agency costs of free cash flows as proposed by

Corporate governance has played a very important role in the present economic condition of India. India successfully started its move towards open and welcoming economy in 1991. From then onwards it has seen an amazing upward trend in the size of its stock market, that is, number of listed firms was increasing proportionately. If India wants to attract more countries for foreign direct investments, Indian companies have to be more focused on transparency and Shareholders value maximization. Even though corporate governance practices can be backdated to as early as 1961 around the world, India was lagging behind. It was not until 1991 when liberalization took place and corporate governance established an international context. The most

The main purpose of this study was to formulate a model of corporate governance suitable for the Pakistani

• Access to Capital - The better corporate governance a company has, the more easily it can access outside capital that the business can use to fund its projects. Since corporate governance includes major shareholders, it connects investors with the business itself, and these investors use their resources and contacts to support the company monetarily. Due to these close connections, capital also tends to be less expensive to finance with a strong corporate governance system.

Globalization of financial markets and fears of financial instability have brought the issue of the corporate governance into forefront of the policy discussions. In an increasingly deregulated policy environment, the big corporate failures have raised the need for implementing competent corporate governance practices. The recent financial crises in different countries have verified how the lack of good governance practices in the financial institutions can lead to a crisis in the system leaving long-term consequences to the. Among the financial institutions, the corporate governance