Corporate Governance - Research Paper Example

Introduction The term corporate governance is employed to refer to the systems through which companies are controlled and directed. This is through the involvement of the market and regulatory mechanisms. It also encompasses the relationship that exists between the board, the management of the organization, stakeholders and shareholders that are involved with the organization. Corporate governance also involves the goals through which the company is governed (Jo & Harjoto, 2012, 58). One of the key interests of corporate governance includes the mitigation of conflicts that may arise among the stakeholders in the company.

This involves ensuring that there is no disagreement in the agenda of the stakeholders in regards to policies, processes, laws, customs and institutions that have influence over how the company is managed. Corporate governance has been necessitated in recent times, with the wake of a number of high profile company collapses, with the principal cause being attributed to accounting fraud. This, therefore, made it necessary for corporate to come up with to avoid such occurrences. Principles of Corporate governance For corporate governance to be effectual, some principles were agreed upon as a framework for the practice.

One of the principles is in regards to the treatment of shareholders. Corporate realized that how they treat their shareholders has a significant impact on their operations. Therefore, it is imperative for organizations to respect the shareholders liberties and assist them in employing those liberties (Norwani, Mohamad & Chek 2011, 210). This can be achieved by encouraging the shareholders to be proactive in the general summits, and through the establishment of a communication that is open and effective.

Another principle includes organizations ensuring that the other stakeholders’ interests are addressed. This is because; it is the obligation of the corporate to ensure that the interests of these parties are addressed. Stakeholders may include employees, investors, the community, creditors, customers, suppliers and policy makers. Among the principles, the board’s roles and responsibilities are also stipulated (Johnson, Moorman & Sorescu, 2009, 4755). The board has a critical function, which requires them to have sufficient skills that are essential in addressing challenges that may affect the corporate in its operations.

Corporate governance ensures that the board is aware of their mandate. The board needs to be autonomous, committed and of an adequate size, to handle its mandate capably. It is crucial for the corporate management of an institution to be triumphant; there ought to be transparency in the Corporation. This is through the making public of the mandate of the board and the general management. This disclosure will ensure that there is accountability on the part of management, and the board to the stakeholders of the Corporation.

I this case, procedures should be implemented to ensure the corporation safeguards the veracity in its finance reporting. It is also fundamental to make certain that there is an accurate and timely disclosure, to give the stakeholders a vivid representation of information regarding the corporate. These principles were formulated to ensure that