Corporate governance is an important system which should not
be ignored by any business enterprise. Regardless of the size of the
enterprise, corporate governance is an important system and great efforts
should be put up in its development and maintenance. For those, who are not
sure about what corporate governance actually means, here is a brief
description.
Corporate governance is set of
principles, policies, rules and processes. This set combines to form a system,
according to which the company is governed and directed. It also plays an important role in the
relationship of the management, the shareholders, stakeholders and the board.
Following this system of corporate governance will help in achieving company’s
goals and bring more benefits to all the stakeholders of the company.
Weak corporate governance may lead to a
weak financial situation of the company and can invite many organizational
hazards. A company with strong corporate governance will be financially strong,
able to attract new customers and stand apart from other companies in the
market.
There are certain principles of
corporate governance, which tells to conduct business in a fair way, maintain
integrity and bring transparency. All the decisions and the actions should be
transparent to all the stakeholders of the company according to their rights. The
business should be carried out in an ethical way. The people in control should
understand the difference between the corporate funds and the personal funds
while carrying out any business activity.
After many of the frauds and scams getting
exposed and coming up in the news, people understand the importance of
corporate governance. There is confidence associated with the company having well
defined corporate governance. By gaining more confidence, the company attracts
new investors from across the globe. It has many positive impacts on the cost
of the share and the company having well defined corporate governance find it
much easier to raise capital when required.
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