Corporate Governance

“Ethics in business is extremely important; your reputation is all you have in life”, says Sir Freddie Laker, a British entrepreneur. Corporate governance is one of the most needed concerns of today’s corporatism. Corporate governance is a relatively recent evolution which came into being in 1970. Corporate governance is all about governing a corporation. It directs and controls the corporation. Corporate governance is basically the procedures, processes, policies, and laws that govern the corporation in the best interest of the shareholders and others.

Good corporate governance leads to integrity of corporations which ultimately lead to their stability. The impact of good quality corporate governance has a positive effect on the economy of the country thus resulting in socio economic development. Corporate governance is an important tool designed to regulate motivation and ability and to reduce inefficiencies arising out of moral hazards. Corporate governance is an important source of discipline over managerial incompetence. The structures and processes of corporate governance support the organization in efficient use of resources and helps in striking a balance between social and individual goals.

Good corporate governance has a direct bearing on the business performance. When properly designed, the governance processes help in better performance; and when poorly designed, will result in painful losses and might even be bankrupted. The highlight of good corporate governance is good corporate behavior and transparency in the business operations. Good corporate governance is needed to create corporate culture to enable companies to maximize their long term value.

Corporate governance helps in constructive management and is greatly used to improve, uplift and advance the company to reach the maximum possible potential. The success of a company is determined by the application of good corporate governance. Corporate governance is all about the principles that are governing the business. The main objective of Corporate Governance is to ensure proper management, to analyze whether the management principles are intact with the objectives of the company and is responsible to maintain integrity, reputation of the firm and to create accountability among the employees of the organization. Corporate governance is still a hard key to be achieved in its totality. Failure to achieve good corporate governance is a threat to the corporations. Actions must be taken to build ideal corporate governance with an aim to make it a reality.

Corporate governance, one of the main business ethics, is a powerful instrument which can destroy one’s business if not monitored and maintained properly. Every organization today is striving to implement good corporate governance to create wealth legally and ethically focusing on the satisfaction of the customers, employees, investors, vendors and the society-at-large. Consequently, good corporate governance is a must to face the dynamism and challenges of businesses in the long run. Hence, every corporation needs to cultivate and practice this “corporate governance” for their long term success and survival.