Question

the role of corporate governance in companies

Answer 1

Corporate governance is a system of rules, practises and processes by which a firm is directed and controlled. This is required to be done to balance the interest of the stakeholders such as the shareholders, customers, suppliers, financiers, etc.

The role of corporate governance is as below:

1. Corporate governance is required to ensure that the companies do not get involved in any illegal activities. The rules and regulations laid down need to be followed and adhered to by all the organisations.

2. Now a days corporate social responsibility is given a lot of importance, many companies have CSR activities thus engaging their employees as well towards their social responsibility.

3. Some of the directors my misuse their powers for their own benefit thus corporate governance is much needed and required to protect the interest of all the stakeholders.

4.In Recent years the ownership structure is changing a lot, corporate governance is needed to ensure the policies are being adhered to they are more consumer friendly and protect the environment as a whole.

5. Corporate governance is also needed to reduce the number of scams and misuse of public money in the recent times.

6. If a company is going global it needs to follow all the foreign rules and regulations as well so that it can survive in the global market.

7. This is also needed to protect the interest of all the stakeholders in difficult times such as merges or acquisitions.