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.
Moreover, from the above mentioned definitions, it can be noted that the main thrust of corporate governance is to enable the top executives to arrive at executive decisions in a systematic manner as opposed to haphazard approach. As such, from the above definitions one is compelled to conclude that corporate governance ensures that the directors and management run the company in a responsible and transparent manner on behalf of the
Corporate governance also includes the relationship between the involved stakeholders and the company 's management objectives.. There is also another side that is the subject of corporate governance, such as a stakeholder point of view that points attention and accountability to other parties other than shareholders, such as employees or the environment (Haidar, 2009). The essence of corporate governance policy is that the parties who play a role in running the company understand and perform functions and roles according to authority and responsibility. Parties that act include shareholders, boards of commissioners, committees, directors, heads of units and employees. Principles in Good Corporate Governance (GCG) In Act No.
Ethics in corporations is formed and decided in line with the particular policies guiding the conduct of employees in each firm. In this respect, it is important to note that every company will have their structured set of values that underpin the actions taken and decisions made in the running of the company. This is because every company is different and will consequently place value of different factors that govern their operations. A company’s decision to behave and conduct business in an ethical manner is in line with various aspects such as organization values, culture, and other associated factors. In this way, the decision for an individual to behave in an ethical manner is not difficult for any morally decent human being.
Corporate Governance as stated in the statement above, function as agents of shareholders, within the corporate governance ecosystem. Shareholders who exercise their rights as shareholders, directly influenced the boards, can ensure responsible actions by companies. Gatekeepers and influencers, insinuated between the shareholders and company, play an important role in promoting self and market discipline, hence in reducing the need for regulatory discipline. Last but not least, private and public enforcement have an important role in ensuring that corporate governance are held accountable through actions by the regulators parties. Proactive actions by the various parties is crucial and this reinforces the corporate governance culture and ultimately
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 increasing importance of companies’ image and reputation Corporate transparency led to the growth of the importance of a further element: corporate reputation since the more a company is transparent, the less it can be perceived as “unethical” and “dishonest”. As a matter of fact, corporate reports can be used as tools that promote some virtues of a company while firms that do not use them result opaque and can ruin their image because of undesirable hidden practices. By voluntarily publishing relevant info about some internal dynamics, companies take on responsibility and accountability of externalities that they could otherwise ignore. Moreover, a transparent company does not have to fear moral judgment and critics because transparency appears to be a deterrent not only to misbehaviors but also to public shames. In a context where costumers appear to be experienced and able to select tons of info about the goods they want to purchase, scandals about info and side effects hidden by companies have strongly impacted on companies image, ruining it and leading to a drop of companies performances.
Several corporate governance mechanisms can reduce these agency problems and also increase firm performance (Agrawal and Knoeber, 1996). According to the definition of the OECD (Organization for Economic Cooperation and Development, 2004), corporate governance is the mechanism by which business corporations are directed and controlled. Corporate governance involves a set of relationships between a company’s management, its board, its shareholders and other
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).
The behavior, actions, and interactions of the members of an organization emerge from the meaning that the reality of that organization has for them. Therefore, a good corporate culture is essential to creating a healthy and thriving workplace, where the workers an inspired to work for the good of the company. The corporate culture also has an impact of the company's reputation and public