Corporate Governance : Effective And Trusted Corporation For The Shareholders

724 Words May 3rd, 2016 3 Pages
Corporate governance is set of predetermined procedures and guidelines that the corporation should consider for creating effective and trusted corporation for the shareholders’ (financiers, customers, management, employees, government, and community) point of view. Shareholders are the individuals who have invested money into a business and expect a significant return on their capital. The main focus of corporate governance is to maximize the wealth of shareholders on long term basis. Improvement of corporate governance can be possible by including other stakeholder representatives on its board of directors. Stakeholders could act in a way that the company can be more responsible to the society at large in addition to maximizing earnings. This kind of stakeholders’ participation in board of meetings and considering their interests can lead to long term profits. The framework or elements of the corporate governance consists of three things: the obvious and implied contracts between the company and the stakeholders for distribution of the responsibilities, rights, and rewards. Procedures for merging sometimes conflicting interest of stakeholders in accordance with their duties, privileges, and roles. Also, procedures for proper supervision, control, and information-flows to serve as a system of checks-and-balances.
Usually corporate governance is unique to each different company, but all has the same concept with the framework or elements. Corporate governance controls the…

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