Question

The recent call for Corporate Governance in the financial institution industry aligns with securing the interest of all stakeholders of the modern corporation. From the financial management perspective, in particular, corporate governance improves financial performance and hence shareholder value maximisation. Empirical evidence in Ghana and beyond, points to the fact that corporate governance, cannot guarantee shareholder value maximisation.

Required                                                          

Provide three arguments for and three against corporate governance in improving financial performance of corporate entities.

Answer 1

Corporate Governance

It is the rules and regulations, related to the Strategical decisions to operate and control a business efficiently. It protect the interest of the various stake holders of a business.

Here we can go through the The Advantages and Disadvantages of Corporate Governance

Advantages

It Provides aset of rules, what to do and dont do in a business

It helps to boost the reputation of the company

Optimum Utilisation of resources

Reduce Risk

Reduce corruption of the higher level management

Standardisation of business activities

Disadvantages

It increases the costs of business operation because a seperate legal management is to be maintained in the organisation

There is a high chance for conflicts in between lower level and top level in the business

Lower employees feel seperation from the higher level employees because of the power of authority

It is very difficult to take strategic decisions