Strengths And Weaknesses Of Corporate Governance

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

The article is written to help readers gain a solid understanding the roles of corporate governance, both inside and outside the company. Its goal is simply to impart information, not make claims or arguments on its own. I will be judging it mainly on the sources gathered, numerous examples and explanations given and the overall effectiveness it possesses in effectively communicating its ideas.

Governance refers to the system by which organisations are directed and managed. Corporate governance represents the relationship between the board, management and its owners (Foreman 2006). It is not only rules and regulations but also ethical culture within an organisation. Without an ethical and accountable environment, corporate governance is at best, unless, and at worst, a means to future corporate malpractice

This review intends to explain the author’s U.S. corporate governance system. Moreover, it tries to explain the system and rules for making decision of the board of directors, managers, stakeholders, and shareholders. In “A Primer on Corporate Governance”, author Cornelis A. de Kluyver, dean of the University of Oregon, provides an explanation of the American system on corporate governance. De Kluyver writes this book for students and executives who wish to enter the world of management; that includes working or dealing with a board of directions in a corporation. This book intends to expand their knowledge of management and governance. The author starts by giving a summary on the history of the U.S corporate governance system. The first part of the book shows how important it is to keep a balance of power within the corporate governance. The second part of the book focuses on the responsibilities of the board, such as selection of CEO, risk management, strategy development, unexpected events and crises. Its purpose is to inform students and future executives of the importance of corporate governance and the function of the board of directors, because it seems that most people have received little to no formal training in these subjects.

As the result, shareholders hire managers(agent) to run the business and act on the shareholder’s behalf. Since managers involved in the daily business, these is information asymmetries between shareholders and managers. Also, managers are likely to have different motives to principals. In shareholder’s point of view is maximum long-term shareholder wealth but the managers may be influenced by different factors such as financial rewards, labour market opportunities and relationships with third parties which are not directly relevant to principals. The management acts in their self-interests instead of acting in the shareholders’ best interests. Therefore, the agency problem arises because there is a conflict of interest between the management and the

Corporate Governance refers to the way organizations are regulated and governed. The Governance structure shows how rights and responsibilities are shared among various stakeholders who are concerned with the operations of the organization. It is also critical to take note of the regulatory environment in which the organization is operating. Organizations have to decide on mechanisms to be followed to achieve the desired results. In my case my company’s Chairman himself must create proper mechanism or system for the better organizational culture ensuring that the Director and Management Committee functions properly and that in turn make the other management team to perform efficiently and effectively. He must ensure that there is full participation during meetings that all relevant matters are discussed and that effective decisions are made and carried

Corporate governance introduces structure where accountability and control of corporations are put in place. It is concerned with how corporate entities are governed as distinct from the way the company is managed. There is both self and legal regulation in the guideline of corporate

The principals (the shareholders) have to find ways of ensuring that their agents (the managers) act in their interests.

Agency Theory is tied up with analyzing and resolving any current issues that exist between their management team and owners. In Agency theory, way of think may

Corporate governance can be defined as the process, customs, laws by which the affairs of a company are managed and controlled it also

Q3. Author discussed Agency theory in this paper. Agency theory is root of corporate governance. Author look at recent research papers which has done vast research on the topics of, corporate governance, the relationship between firm performance and board size, board structure and characteristics.

Corporate Governance provides the guidelines as to how the company can be directed and controlled such that it can fulfil its goals and objectives in a manner that adds to the value of the company and is also beneficial for all stakeholders in the long term. Stakeholders will include everyone ranging from the board of directors, management, shareholders to customers, employees; in society the management of the company hence assumes the role of a trustee for all the others (Tricker, 2012).

In other words, corporate governance is the acceptance by management of the inalienable rights of shareholders as the true owners of the corporation and of their own role as trustees on behalf of the shareholders. It deals with conducting the affairs of a company such that there is fairness to all stakeholders and that its actions benefit the greatest number of stakeholders. In this regard, the management needs to prevent asymmetry of benefits between various sections of shareholders, especially between the owner, managers and the rest of the shareholders.

A “family firm” is defined as an organization that shares four common traits mentioned below:

Corporate Governance refers to the way a corporation is governed. It is the technique by which companies are directed and managed. It means carrying the business as per the stakeholders’ desires. It is actually conducted by the board of Directors and the concerned committees for the company’s stakeholder’s benefit. It is all about balancing individual and societal goals, as well as, economic and social goals. Corporate Governance is the interaction between various participants (shareholders, board of directors, and company’s management) in shaping corporation’s performance and the way it is proceeding towards. The relationship between the owners and the managers in an organization must be healthy and there should be no conflict between the