Corporate Governance: Principles And Principles Of The General Electric Company

Corporate Governance
Corporate governance is a system which consists of a bundle of rules with practices through which a company is controlled and directed. It primarily comprises of a balance in the interests of stakeholders such as management, shareholders, government and even the community. Board of directors are responsible for the governance of their companies (The Financial Aspects of Corporate Governance 1992).
-The shareholders hold the right to appoint directors and auditors and to ensure that a good corporate governance structure is in place.
-The board of directors have the responsibility to set up long terms, strategic aims, make provision for resources and ensuring effective management of the corporation and rewarding shareholders
…show more content…
Furthermore, as per the principles of corporate governance, there should be disclosure and transparency, under which with the obligation to hike the level of disclosures ensures a decline in the level of asymmetric information- Verrecchia (1999). This creates a balance of power in transactions and lowers the level of uncertainty.

Principles of corporate governance
There are basically 10 fundamental principles (General Electric Company-2017) and (Australian Institute of company directors 2013) namely;
Principle 1. Balance in skills, independence, and experience of the board applicable to the nature of the company
Principle 2. Safeguard integrity
Principle 3. Equitable treatment of all stakeholders
Principle 4. Encourage performance
Principle 5. Structure the board to add value
Principle 6. Assessing the elements of risks and uncertainty
Principle 7. Ethical in decision
…show more content…
A system should be devised to identify, assess and manage risks in an efficient manner. To facilitate this exercise, the board should establish policies on risk oversight and management.
Principle 7;
Another principle which the company should follow is that to promote ethical and responsible decision making. The ethical behavior should be clearly clarified especially to those who have the chance to materially influence the integrity, strategy and operation of the business and its financial performance.
Principle 8;
The audit committee should work on remuneration policies that attract and maintain motivated and hardworking directors and employees so that the performance of the company is made better. Profit related pay could be a good mean to encourage performance to be enhanced as the key elements would be motivated to work harder. However, the directors should not be the one deciding about the remuneration packages, instead a Remuneration Committee should be created to fix the directors rewards,
Principle 9;
Any company has legal obligation towards stakeholders such as employees, clients, community, or shareholders. Corporations can create added value by managing better its intellectual capital, human resources, and other

Related Documents