corporate governance in the Era of Globalization Concept and Its Meaning Corporate governance is a process or a set of system and processes to ensure that a company is managed to suit the best interests of all. The systems which can ensure this may include structural and organizational matters. The stakeholders may be internal stakeholders (promoters, members, workmen and executives) and external stakeholders (shareholders, customers, lenders, dealers, lenders, bankers, community, government and regulators) corporate governance is concerned with the establishment of a system whereby the director are entrusted with responsibilities and duties in relation to the direction of corporate affairs. It is concerned with accountability of persons who are managing it towards the stakeholders. It is concerned with the morals, ethics, values, parameters, conduct and behavior of the company and its management. Corporate governance is a voluntary ethical code of business of companies.
According to Cadbury committee on financial aspects of corporate governance. It is the system by which companies are directed and controlled. The board of directors are responsible for the governance of their companies. The shareholders role in the governance is to appoint the directors and the auditors and to satisfy themselves that an appropriate governance structure is in place. The concept of corporate governance hinges on total transparency, integrity and accountability of the management, which includes non-executive directors. It is a system of making management accountable to the shareholders for effective management of the companies, in the interests of the company and also with adequate concern for ethics and values.
... ; Di Donato, F., (2006), _The relation between accounting frauds and corporate governance systems: an analysis of recent scandals_, Available from: SSRN: http://ssrn ... that the colonial background has played a role in governance, especially budget management systems in British old colonies (Lienert & Sarraf, 2001). The ...
Corporate governance recognizes issues like maintaining continuity by succession planning, identifying opportunities, facing challenges and managing changes witting the business and allocation of resources towards the right priority. Maximizing shareholder wealth is the comer stone of corporate governance. The large and professional investors, mutual funds and pension funds have analytical skills and business acumen and can play a vital role in corporate governance, because such investors and shareholders would have the same objective of maximizing the shareholders wealth. Corporate Governance mainly consists of two elements i. e. , A long-term relationship, which has to deal with checks and balances, incentives of managers and communications between management and investors.
The second element is a transactional relationship involving matters relating to disclosure and authority. Corporate governance deals with laws, procedures, practices and implicit rules that determine a company’s stability to take managerial decision vies-avis its elements, particularly its shareholders, creditors, state and employees. Corporate governance refers to an economic, legal and institutional environment that allows companies to diversity, grow, restructure and exit and do every thing necessary to maximize long- term shareholder value. Corporate Governance – Global Scenario Governance in relation to a business organization concern with the intrinsic nature, purpose, integrity and identity of the organization and focuses primarily on the relevance, continuity and fiduciary aspects of the organization. It involves monitoring and overseeing strategic direction, socio-economic and cultural context, externalities and constituencies of the organization. Hence, corporate governance may be called as an umbrella term encompassing specific issues arising from interactions among senior management personnel, shareholders, board of directors, other constituencies and the society at large.
... than they actually are. Corporate governance is therefore of utmost importance in any organization to limit CEO almightiness and protect shareholders interests. Such acts ... recent financial crisis, companies’ defaults and crushes, the importance of corporate governance has risen significantly. Corporate scandals that have impacted companies all over the world ...
It deals with the exercise of power over the directions of enterprise, the supervision of executive actions, acceptance of a duty to be accountable and regulations of the affairs of the corporation. With the enactment of joint stock companies Act, in 1844, the English Company Law become one oaf the most permissive in the world and the concept in subsequent years become the basis of the corporate governance and framework for company law in many jurisdictions including India, Hong Kong, New Zealand, Singapore, South Africa as well as the states in Australia and provinces in Canada, Company Law developments in the United States, through not directly influenced by the English model, evolved along similar lines reflecting similar ideological traditions. However, development in continental Europe followed a different path. The regulations of corporate entities in Germany adopted for more shareholder have a commendable say as compared to workers.
In many European countries, shareholders exercise lesser control than the workers and similarly, in Germany the representatives of Union serve on supervisory boards, Until recently in Japan shareholders virtually played no role except to provide capital. In India too, the institutional investors and other shareholders were passive investors and the companies were governed as family business. However, the situation is changing fast with perceptible change in the profile of corporate ownership and insinuative improvement in the corporate governance. In other developing countries like Malaysia and Sri Lanka also, the breed for better corporate government has been realized in the wake of liberalization process and the privatization of State owned enterprises. Corporate Governance and Management The complex growth of modern business and emergence of corporate giants necessitate and require professional ised approach in governance I and management Of corporations. The changing global corporate scenario also emphasizes that a good management owes not necessarily to effective organization culture but to a great extent to the mission, vision and proactive approach of the top management.
... . The company's board of director's position is to oversee management and ensure that the shareholders interest is being served. Corporate governance focus is ... Corporate Governance Corporate Governance is the relationship between the shareholders, directors, and management of a company, as defined by the corporate character, bylaws, formal policies and rule laws ...
The success of an organization greatly depends on the leadership. human resources and information system, etc. Organizations have to be well structured and steered by professional managers. The structure of an organization must suit the mission and should aim at enhancing the commitment to optimize the resources. Thus, there is need for a value Committed Professional organization opportunities for the professional managers to exemplify their potential for the common Objectives of accomplishing the goal. In view of the advancement in information technology, technical expertise coupled with professional vision commitment, objectivity, responsiveness and proactive approach can IC-ad to the professionalization of corporate governance and corporate management.
Corporate Governance in the Era of Globalization Management of Corporate Governance Managing Corporate governance is a complicated task as all corporate may not be professionally managed, This position becomes further compounded when confronted with the manner of enforcement of code of good corporate practices. There is no scope for imposition of Such a code of the corporate from the above, but the need to evolve such a code by the corporate Financial Institution themselves is nonetheless relevant and important for the future of corporate, major stock holders and lenders of financed, whose nominee directors are on the Boards of assisted concerns have a proactive role to play through audit committees in evolving a code for incorporate practices to suit our needs and economic development. Corporate Governance and Boardroom Politics Corporate governance codes, which are emerging from a variety of quarters, are woven round the role and responsibility of the board of director. A discussion of the essential prerequisites for effective supervision by the board, an overview of the ground realities in the Indian corporate sector and an assessment of the Significance of the current trends.
Issues of priority for the Board Let us examine some of the issues relating to corporate governance, which directly impinge or good management – whether in the public or private sector. Questions related to ethics and values are being incorporated in the valuations of “good companies” which to have a direct linkage with good governance. 1. Information 2.
The Research paper on THE IMPORTANCE OF CORPORATE GOVERNANCE IN AN ORGANISATION, AND ITS IMPACT ON KEY STAKEHOLDERS
... led to the formulation of various codes of best practices of corporate governance by many countries and the organization of many international conferences aimed ... functions of Board of Directors, management, audit committees, internal control structure, employees and shareholders in the governance of a corporate entity. The corporate governance structure specifies ...
Time and Resources 3. Expertise 4. Education for Outside Board Members 5. Splitting up Authority 6. Business ethics 7. Interests of the different stakeholders 8.
Short and Long Term Objectives. 9. Board Cultural 10. Self evaluation of the Board Ground Realities: The Institutional Bedrock 1. Relationship of the board with the management. 2.
Management controls the access to information. 3. Codes on corporate governance. 4. It is only the forms that appear to have changed over the decades not the substance. 5.
When Company is a part of large powerful group. Changing Institutions: 1. General acceptance of the corporate governance code. 2. The market for corporate control. 3.
Contrary trend. Concluding Comments I have listed out ten basic issue that have a determining impact on the quality of governance by the board. The primary responsibility for addressing these issues and creating conditions for transparent corporate governance. With increasing awareness, investors will no longer depend on regulators to protect them. They will on their own shift allegiance and do so overnight to companies which maximize shareholder value. The key differentiator, with everything else being common, will be the ability to create self-driven, self-assessed, self-regulated organization with a conscience.
That ultimate of what corporate governance in India has to be all about.