The main objective of the corporate governance is to eliminate or reduce the principal agent problem through mechanisms in different organizations. It also deals with the economic efficiency and the welfare of the shareholder. The impact of corporate governance is the efficiency in the economy, and the development of the society.
Principles Of Corporate Governance
Following are the principles of corporate governance
- Equal treatment and rights of shareholders
- The interests of other stakeholders'
- Role and responsibility of the board of directors
- Ethical behavior
- Transparency
Parties Involved In Corporate Governance
The CEO, shareholders, management, and board of directors are the parties involved in corporate governance. Board of directors sometimes play important part in corporate governance. Their responsibilities is to make the company's strategy, to safeguard the accountability of the organization and to appoint senior executives. The parties that are involved in the corporate governance have interest in the performance of the organization. The managers and directors are paid heavy salaries to ensure the safety of the organization and to increase the total worth of the organization.
Shareholders are given dividends if the organization manages to reach its goal in a specific year. The customers receive goods and services while suppliers are compensated too.
Good corporate governance requires honesty, integrity, trust, effective performance, respect and commitment towards the company. |
