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Corporate Governance

If u see the newspapers, this term is being given a great mileage after the SATYAM DUD… I would like my readers to know more abt it..


Corporate governance involves a set of relationships amongst the company’s management, its board of directors, its shareholders, its auditors and other stakeholders.

  1. These relationships, which involve various rules and incentives, provide the structure through which the objectives of the company are set, and the means of attaining these objectives as well as monitoring performance are determined.
  2. The key aspects of good corporate governance include transparency of corporate structures and operations; the accountability of managers and the boards to shareholders; and corporate
    responsibility towards stakeholders.
  3. While corporate governance essentially lays down the framework for creating long-term trust between companies and the external providers of capital, it would be wrong to think that   the   importance   of   corporate   governance   lies   solely  in   better   access   of   finance.
  4. Companies   around   the   world   are   realizing   that   better   corporate   governance   adds considerable value to their operational performance:
  5. It improves strategic thinking at the top by inducting independent directors who bring a wealth of experience, and a host of new ideas
  6. It rationalizes the management and monitoring of risk that a firm faces globally
  7. It limits the  liability of  top management  and directors,  by carefully articulating  the decision making process
  8. It assures the integrity of financial reports
  9. It  has   long  term  reputational  effects   among key  stakeholders,  both  internally  and externally 

Good corporate governance- the extent to which companies
are run in an open and honest manner- is important for overall market confidence, the efficiency of capital allocation, the growth and development  of countries’ industrial bases, and ultimately the nations’ overall wealth and welfare.


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