The corporate governance includes the practices, rules and the processes which are controlled by the company. The corporate governance helps to balance the interest of different stakeholders of the company which includes management, suppliers, government, shareholders and customers. All the objectives of the company can easily be accomplished with the help of the corporate governance. The meaning of the governance includes controls, resolutions, policies and set of rules. It is the importance of the shareholders that they can directly affect the governance.
Corporate governance has been a topical issue both in the developed and developing countries for the past three decades. Mayer (2013) contends that corporate scandals which have occurred on the international business arena including Africa have prompted governments and regulatory bodies to tighten the screws on corporate governance compliance requirements, especially on the part of public listed companies and state owned enterprises in order to protect the interests of various stakeholders. Klapper and Love (2004) noted that owing to scandals, corporate governance best practices are now on top of the agenda of governments and regulatory bodies and as such, corporate governance statements have become one of the most important disclosure requirements
Most corporate companies have had negative associations with the environment and society of operation thus giving them a negative image in the public sphere. A business therefore needs to establish interests in matters national, global, or even local directed towards the wellness, wellbeing and the concern of others that has nothing to do with
Lack of truthfulness by managements on all sides. According to the King 111 report and the Sarbanese Oxley Act, 1) the board should ensure that the company is, and is seen to be a responsible corporate citizen. According to the (IOD: 2009) the success of the company can be measured using various yardsticks that include financial performance as well as the impact of the company on the economy, society and the environment. Thus, according to the King III the company should protect, enhance and, invest in the welfare of the economy, society and the environment. The King III emphasised the fact that being a good citizen for the company imply formulation of an ethical relationship of responsibility between the company and the society within which it operates.
Governance has proved an issue since people began to organize for a common purpose. Ensuring the power of organization is harnessed for the agreed purpose, rather than diverted to some other purpose appears to be a constant theme. Corporate governance investigates how to motivate and ensure an efficient management of the enterprises and involves: a set of formal and informal rules that establish certain relationships between the executive management of the company, the board of directors and the shareholders of the company, as well as other people of interest groups that have ties to the company; mechanisms through which the objectives of the company are set and are established the means of achieving those objectives and of monitoring the performance;
The findings show that Corporate Governance mechanisms exhibit implications for firm performance, fraud, capital retention, financial constraints, institutional investors, auditing and the quality of financial disclosures. There is reviews evidence documenting the importance of independent board directors in regulation and ethical conduct showed by this study. Challenges / Practical Issues In corporate governance, there is seven areas of which is transparency, management discipline, independence, accountability, responsibility, fairness and societal awareness. Out of this seven, societal awareness category is excluded due to its relevancy in corporate governance. Transparency refers to the ability of outsiders to assess the true position of the firm.
A company can have sound corporate governance and a good standard of code of ethics but lack people with strong moral principles and high quality of being honest e.g. senior managers and directors. The board of directors must have a crystal, clear ethical leadership before on their power of firing unethical directors and mangers. The specific ethical values that justify all features of corporate governance are responsibility, accountability, fairness and transparency. Therefore the board is required to act ethical towards shareholders and stakeholders for the sake of the
Examining the relationship between corporate governance, stakeholder structure and associated firm performance can be of paramount significance for an investor to ensure ROI and secure investment. Interestingly, major difference among the various counties corporate governance systems is the difference in the ownership and control pattern of firms that exist across
Corporate governance being referred to a system by which a company is directed and controlled (Al-Tamimi, 2012). The objective of corporate governance in business is to ensure a company is able to make better decisions. Through better decision making it enables businesses to be successful, the key is to ensure there is flow of information i.e. making sure the right information gets to the right people at the right time. Corporate governance is subdivide into elements known to be (board of directors, disclosure and transparency, executive compensation, governance structure, compliance and polices, relationship with shareholders and stakeholders).
It affects company’s reputation and help defines business model that will thrive even in adversity. Introduction Corporate governance has become a phenomenon in today’s business world. With greater technology and the rise of social media, investors and the general public are increasingly monitoring and demanding for better