What is Corporate Governance? Identify the objectives of the good corporate governance.

Expert Solution

Corporate Governance refers to the term for prescribed rules, principles, laws, and process for operating the business organisation ethically by following all the ethical requirements and which is beneficial for all the stakeholders whose interest is affected by the operation of the organisation like customers, suppliers, government, and management etc. Therefore, the success or failure of any organisation is mainly depends upon the successful implementation of effective Corporate Governance in the organisation in accordance with the ethical standards otherwise it will affect the financial health or image of the organisation. A good Corporate Governance is really required for the success of any organisation and to maintain a practice of good corporate governance in the organisation various Acts are also implemented like Sarbanes-Oxley Act, and Gramm-Leach-Bliley Act.

Following are the objectives of Good Corporate Governance:

Transparency: Good corporate governance ensures to maintain a high degree of transparency of the activities of the organisation to all the stakeholders. Therefore, proper rules and regulation must be implemented for full disclosures of activities of the organisation that may affect the interest of stakeholders.

Accountability: All the activities of the organisation are managed by the management of the organisation in order to increase the value for organisation and for the shareholders. Therefore, good corporate governance also ensures effective accountability of management towards organisation and shareholders.

Safeguarding Shareholder’s Interest: Corporate governance prescribed effectives rules and regulation for managing the business operation of the organisation in order to safeguarding the interest of shareholders and lead the organisation towards wealth maximization for the shareholders.

Statutory and legal Compliances: Corporate governance ensures that all the legal and statutory compliances are timely followed by the organisation for effective management of business operation.

ekkarill92 answered 7 months ago

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