PhD Finance - Effects of Corporate Governance - Assignment Example

EFFECTS OF CORPORATE GOVERNANCE By Effects of Corporate Governance Today’s organizations have come up with various policies, processes and structures which create a corporate governance system (Cutting & Kouzmin, 2011, p. 80). Therefore, organizations have formed management bodies, committees of board and reporting process to facilitate an efficient decision making process. In addition, other organization have gone further to focus on the various types of techniques and processes which enable them to not only improve their relationship with the shareholders, but also the quality of their boards and management team.

Although some nations require (by law) organizations to implement good governance techniques (Brown & Marsden, 2013, p. 55), most of these techniques are implemented by organizations since they believe that they add value to the overall organization. According to, good corporate governance entails a much more soporific structure aimed at improving the process of decision making whilst creating appropriate avenues for shareholder’s engagement (American Law Institute, 1997, p. 272). Therefore, the concept of good corporate governance does not merely entail the creation of a governance structure or decision making.

There are a number of good corporate governance techniques that an organization can adopt in a bid to increase the firm’s value. These techniques may include analyzing and disclosing the various risks facing the organization, choosing and compensating the management team, enabling the shareholders to vote on board elections and efficiently dealing with employee and management compensation issues (Tully, 2005, p. 18). Implementing these techniques will not only boost the employees’ morale to work at full efficiency but also enable the investors to be optimistic in terms of the investment returns.

Whereas the practices of good corporate governance may vary from one organization to another, there is developing agreement on what the various ideal practices of good corporate governance are. The Organization for Economic Co-operation and Development (OECD), has come up with an ideal good corporate governance model that can be adopted by organizations (Goldin & Reinert, 2012, p. 261). However, apart from this model, many organizations have developed good corporate governance models which can be adopted by other companies thereby enabling them to maximize their firm’s value.

Therefore, the models of good corporate governance are significant in the general performance of the organization since they create a highway of value maximization.ReferencesAmerican Law Institute. (1997). Corporate governance: Current and emerging issues: ALI-ABA course of study materials. Philadelphia, Pa: American Law Institute-American Bar Association Committee on Continuing Professional Education.Brown, I., & Marsden, C. T. (2013). Regulating code: Good governance and better regulation in the information age.

Cambridge, Mass: The MIT Press.Cutting, B., & Kouzmin, A. (2011). Refounding corporate governance: The metaphysics of corporate leadership. Saif Zone, Sharjah, United Arab Emirates: Bentham Science Publishers.Goldin, I., & Reinert, K. A. (2012). Globalization for development: Meeting new challenges. Oxford: Oxford University Press.Tully, S. (2005). International documents on corporate responsibility. Cheltenham, UK etc.: Edward Elgar.