Businesses and corporate houses have a huge impact on a country’s economy. Apart from investing in government projects, corporate houses also carry the responsibility of proper conduct on their shoulders. Business houses need to behave ethically and this in turn will lead to economic development…
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So corporate governance has now emerged as global responsibility. The effect of global approach to regulate corporate governance is debatable. Criticisms are there that such regulations carry no meanings as big corporate houses have the power to manipulate even the international policies owing to their size and their influence in markets. In recent times agencies such as Organization for Economic Corporation and Development (OECD) and Indian Labor Organization (ILO) have prepared a set of guidelines so as to regulate corporate governance. The activities and behavior of business houses are checked upon mainly on issues like environmental protection, human rights, safety and corruption. In developing countries through effective corporate governance corporations can contribute largely in labor and environmental conditions of the country. Considering all these facts one can rate global approach to regulation highly important for corporate governance and the paper intends to addresses this issue through a series of case studies and analysis.
Corporate governance helps companies and economies to bring in new investors and strengthen the foundation. It also makes a firm more competitive by improving its economic performance. Elimination of corruption and financial scandals is considered as the major objective of corporate governance.It has been widely accepted that a written code of conduct helps in improving corporate governance. United Kingdom has adopted such principles for governance in 2003 and has obtained amazing outcomes in 2005. These global rules include ability of mobilizing and monitoring of productive resources and their effective allocation. (Isaksson, 1999). Separate committees should be set up for nomination, compensation and auditing. Transparency of the annual reports and accounting matters is now compulsory as per guidelines. This are now regulated through actuarial information in UK (Regulatory Strategy: Our role and Approach, 2009). The board of directors’ decision making should only be in favor of fulfilling company’s interests. The conduct of the directors is very crucial and their decisions matter a lot, especially in turnaround situations. The investors also bear similar responsibilities more in the area of risk management and when voting for vital issues. There is a need for the companies to realize their social and environmental responsibilities (Bowes, 1999). The importance of this global approach for proper conduct is to such an extent that corporate social responsibility has taken the name of globalization of business and economies. National economies have become enormously inter dependant in the areas of trade and finance. In some cases there has also been integration of macroeconomic policies (Guillen, 1999).In Asian countries before such global approach there have reports against the companies for unfavorable working conditions and employment of child labor. For developing countries overlapping public and private sector have prevented good corporate governance in the past (Kostyuk, Braendle & Apreda, 2007) Global agencies have worked quite hard in regulating
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“The Impact of Globalization on Corporate Governance Assignment”, n.d. https://studentshare.org/business/1392939-international-financial-strategy.
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