Importance And Importance Of Corporate Governance

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What is corporate governance and why is it important?

In the twenty-first century, the business world is becoming increasingly concerned with bad business ethics that arise in a business environment. The world is surprised by both illegal and unethical business practices in several high-profile corporations. The existing regulatory appeared to be insufficient to manage those practices such as corruption, fraud, embezzlement. These problems force global business groups to initiate a solution to overcome and anticipate it in the future. As a result, they strengthen organizations with the implementation of corporate governance systems. These are expected to make the company run effectively based on the integrated system.

According to Cadbury (1992, p. 15), corporate governance can be defined as “the system by which companies are directed and controlled”. Corporate governance is “the relationship among various participants in determining the direction and performance of corporations” (Monks & Minow, as cited in Maassen, 2002, p. 12).

This essay will focus on the explanation of the corporate governance and the reasons why corporate governance is very essential. Therefore, this essay has been divided into three parts. First, the models of corporate governance systems in different countries. Second, the principles of corporate governance. Third, the benefits of good corporate governance in the company.

“Corporate governance systems vary around the world” (Fernando, 2006,

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