Question

PLEASE BE DETAILED FOR EVERY SINGLE POINT & PLEASE CITE ALL OUTSIDE SOURCES:

Name the key aspects of corporate governance. Be sure to address the following:

• pros and cons of the premise of corporate governance
• ethical considerations
• why corporate governance models so often fail

Answer 1

Corporate governance means the way by which a business corporation is managed and run as per the desire of stakeholders. It refers to the way by which a business organization is being governed. it includes every aspect of business activity starting from the decision making until execution os the plans.

Key aspects of corporate governance

Key aspects of corporate governance include transparency, accountability, and security. All of these three aspects are important in the successful running of a company and forming a solid professional relationship among its stakeholders including the board of directors, managers, employees, customers and shareholders and many more.

Pros and cons of the premise of corporate governance

Pros:

1. Good corporate governance makes sure corporate success and economic upliftment.

2. It maintains investor's confidence, by which, a company can raise capital effectively.

3. It reduces capital costs.

4. The share price will rise and this will lead to an increase in goodwill and market share of a company.  

5. It provides a proper inducement to the owners and managers to achieve goals that are in interests of all the stakeholders and the corporate as well.

Cons:

1. It will lead to higher administrative costs than that of LLC and partnership.

2. Conflicts can arise when shareholders do not actively participate in the business activities and instead hire professional managers to run the business.

3. There are more chances of Insider trading when any of the stakeholders leak the confidential information of the business entity.

Ethical considerations

Board behavior	Integrity, fairness, honesty, and respect
Structure and processes	Appropriate composition of the board, committees, and decision making processes.
Strategy and vision	The board sets the business core values and gives the reason for what business stands.
values and standards	Ethics programs, procedures, and corporate social responsibility initiatives.
Procedure and control	Delegation of authority and employee empowerment is the core of business ethics.

Why corporate governance models so often fail?

Corporate governance models fail because of the following reasons:

1. Poor ethical leadership

2. lack of proper integrity

3. Mismanagement and lack of understanding of ethical considerations

4. Fraud and corruption.

5. Violation of ethical corporate governance rules

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