Corporate Governance - Essay Example

Corporate Governance Introduction Corporate governance takes an interest in resolving general action issues in discrete stakeholders’ format and reconciling conflicts of interest among different corporate shareholders. The key predicament of corporate governance results from this synopsis. Regulating the intervention of stakeholders may safeguard the interest of small investors. Nonetheless, these controls may add the scope for abuse and managerial discretion. This paper is an integrative essay that looks at corporate governance from the perspective of two separate articles.

In the past, corporate governance was illustrated in the form of representative government. Representative government was an essential aspect of the corporation more than partnerships. Since the corporate government’s inception, the responsibility and functions of the board and organization around corporate elections have been the core theme. There is always a problem of how to control limits on executive will and small stakeholder protection. The corporate suffrage gave every member a vote (Becht, Bolton & Roell 2005, p. 2). This was to remove privileges enjoyed by other members over others.

The debate on management’s power to solely run a corporation is extremely old.Corporate governance has become a largely outstanding issue in the last two decades. This is because of several issues. First, there has been growth in the global privatization wave for the last two decades. Second, there have been reforms in pension fund and a growth in private savings. Third, it was influenced by the 1980s takeover wave. Fourth, there has been an integration and deregulation of capital markets. Fifth, there has been a concentration on corporate governance due to the East Asia crisis of 1998.

Sixth, it has been influenced by a sequence of USA corporate breakdowns and scandals that have grown (Becht, Bolton & Roell 2005, p. 7).The pragmatic information on corporate governance is extremely large. Conversely, there are several techniques that can be employed to resolve issues within conflicting shareholders. They include: shareholders suits and fiduciary roles; hostile takeovers; incentive schemes; large investors; and board of directors. In addition, corporate boards have three core duties: strategic oversight, corporate accountability, and senior level staffing and evaluation.

Corporate boards have a duty to assess and endorse core capital investments, strategic plans, and risk management practices and policies. They also supervise implementations that may comprise effectiveness, systems, and annual budgets (Epstein & Roy 2010, p.33).Boards have a duty to guarantee that corporations reveal reliable and relevant nonfinancial and financial information to all shareholders. There should also be systems that enhance ethical behavior, governance, and transparency. They may include compliance, risk management, and disclosures.

Senior level staffing and evaluation entails choosing and compensating board directors and senior executives (Epstein & Roy 2010, p.32). Boards should also guarantee an efficient succession plan is in place.Corporate governance also entails evaluating employee performance and corporate performance. Only corporate boards’ performances are not evaluated. Currently, the 2002 SOX Act, in addition, to other laws approved by the stock exchanges has developed corporate governance procedures (Epstein & Roy 2010, p.37). Nonetheless, more should be done to enhance corporate operation.

In my opinion, corporate governance should get hold of principal performance indicators to properly comprehend corporate responsibilities. There should be extra information that allows investigators to predict a corporation’s future cash flows. Also, corporate executives should permit transparency to facilitate the corporation’s communication of its operations.ReferencesBecht, M, Bolton, P & Roell, A 2005, ‘Corporate governance and control’, European Corporate Governance Institute, August, pp. 8-122.Epstein, MJ & Roy M 2010, ‘Corporate governance is changing: are you a leader or a laggard?

’, Strategic Finance, October, pp. 31-37.