Importance Of Corporate Governance

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CHAPTER 3: CORPORATE GOVERNANCE

3.1 Introduction
Corporate governance is important element to direct and managed the companies or institutions . It is refers to the way the company or institution be governed. One of the objectives of corporate governance that wants to be achieved is to balancing the interests of many stakeholders within the institutions or company such as the shareholders, management, customers, suppliers, financiers, government and the community.

The implementation of corporate governance is involving the various interactions of participants between shareholders, board of directors, and institution’s management. The interactions are important in order to ensure the objective of corporate governance can be achieved which can provide benefits to all the participants.

The essential element that wants to be emphasizing by the implementation of corporate governance is the elements of transparency within the companies or institutions. The transparency elements will safeguard the interest of all shareholders without distinguish majority shareholder or minority shareholder. The implementation of corporate governance will ensure that all shareholders fully practice their right. Besides, Corporate Governance is also emphasis the elements of trustworthy, moral, and ethical environment.

3.2 Definition of Corporate Governance

The definition by the Finance Committee on Corporate Governance in Malaysia in the Report on Corporate Governance (2002) stated that:
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