b) Explain briefly the concept of corporate governance, and enumerate its broad objectives ~ Vivek Economics & Accountancy

 

b) Explain briefly the concept of corporate governance, and enumerate its broad objectives

Answer

Corporate Governance – Introduction

 Corporate Governance is a concept and administrative framework to introduce basic directions and viewpoints for managing a business unit with best interest. It shows and determine a new and creative vision of business, where a set of core values, better managerial control, compassing human rights, making better coordination between business and society may be possible.

Corporate Governance – 15 Important Objectives

 The foremost objectives of corporate governance are to make efficient management as well as inspire and strengthen the trust and confidence of the people by ensuring business’s commitment to higher growth and development.

 It seeks to achieve the objectives as stated here:

 1. To develop better and most efficient management of business organisation,

2. To develop more applicable criteria towards performing the task,

 3. Holding the balance between social and economic goals,

 4. To encourage the efficient use of scarce resources,

 5. To ensure perspective work place management,

 6. To develop the business transactions to be based on values,

 7. To develop the confidence and interest among the business men and society at large towards the social reforms,

8. To develop a better working environment to get some patterns of democratic style,

 9. The managerial cadres are required to create wealth legally and ethically,

 10. To bring a high level of satisfaction to customers, employees, investors and the society at large,

 11. To determine the level and composition of accountabilities,

 12. To make balanced representation of adequate number of non-executives and independent executive in the board of directors who will take care of the interest and well-being of all the stakeholders,

 13. To adopt transparent procedures and practices and arrive at decisions on the strength of adequate information,

14. To provide disclosures to all the relevant facts and information to stakeholders and other partners of the business,

 15. To make effectively and regularly monitor and control the affairs and functioning of the managerial group of the concern.

 Benefits of Corporate Governance

 Good corporate governance ensures corporate success and economic growth.

 Strong corporate governance maintains investors’ confidence, as a result of which, company can raise capital efficiently and effectively.

 It lowers the capital cost.

 There is a positive impact on the share price.

 It provides proper inducement to the owners as well as managers to achieve objectives that are in interests of the shareholders and the organization.

 Good corporate governance also minimizes wastages, corruption, risks and mismanagement.

 It helps in brand formation and development.

 It ensures organization in managed in a manner that fits the best interests of all.

b) Explain briefly the concept of corporate governance, and enumerate its broad objectives ~ Vivek Economics & Accountancy