Corporate Governance Of Public And Private Sector Banks Essay

Corporate governance in itself has no single definition but common principles which it should follow. For example in 1994 the most agreed term for corporate governance was “the process of supervision and control intended to ensure that the company’s management acts in accordance with the interest of shareholders” (Parkinson, 1994)1. Corporate governance code is not a direct set of rules but a self-regulated framework which businesses choose to follow. This code has continued to change in the past 20 years in accordance with what is happening in the business world. For example the Enron scandal caused reform in corporate governance with the Higgs Report which corrected the issues which were necessary. Although it does not quickly fix problems, it gives a better framework to

• Governance and oversight: Assessing business model and strategy changes and reinforcing the importance of sound corporate governance appropriate for the size and complexity of the individual bank. A specific focus will be on determining the adequacy of strategic, capital, and succession planning. Examiners will assess whether the plan is appropriate in light of the risks in new products or services. If applicable, examiners will assess the bank’s merger and acquisition processes and procedures.

Ten years ago, corporate governance was still in the concept stage. There wasn’t a lot of information about corporate governance. After some big corporate failure that hit the economy, it has become obvious that corporate governance matters. After the collapse of Enron,Wordcom,..a new regulation was born (Sarbanes Oxley).The law was implement to increase transparency and to promote integrity and accuracy inside the companies.

Risk management is expansion effectiveness in governing of these banks all things considered techniques tend to expand the corporate governance of a financial institution. In times of volatility and fluctuations in the market, financial institutions need to prove their mettle by withstanding the market variations and achieve sustainability in terms of growth and well as have a stable share value. Thus the need for an efficient risk management framework is paramount in order to factor in internal and external risks.

Corporate governance is the control of the strategic direction of an organization by the board of directors through exercising their power and influence as the stakeholders. It may also be explained as policies, processes, customs and laws that are utilized to direct, control and administer an organization (Feld & Ramsinghani, 2013). In an organization, pursuing the set goals should be done according to a set of policies and processes that are as fundamental as the federal laws that govern the running of any business or organization. These formal duties and processes are upheld by the board of directors and include the duty of loyalty and duty of care as well as formation of committees which may include the audit committee, nominating

Corporate Governance is the set of relationships between a company’s shareholders, board, the executive management and other stakeholders. The conflict of interest between these parties has resulted in what is called the agency problem, which arises from the separation of ownership and control at a corporation. Good corporate governance practices attempt to resolve the agency problems by aligning the interests of managers and shareholders. The same corporate governance is not followed by all countries; it differs according to the culture, practices, legal, and history, economic and social environment. Each company follows its own procedure for governing on the lines of the model given by the country. Corporations today have laid down the policies of CG in their own manner as a result of which an important question is whether standard CG can be established and achieved at a global level. In each country, the corporate governance structure has certain characteristics or constituent elements, which distinguish it from structures in other countries. CG component factors can be classified into three groups those related to top management organization, the board as whole or shareholders, and stakeholders.

Corporate Governance is the relationship between the shareholders, directors, and management of a company, as defined by the corporate character, bylaws, formal policies and rule laws. The corporate governance system was designed to help oversee the decisions and best interest of the shareholders. The system should works accordingly: The shareholders elect directors, who in turn hire management to make the daily executive decisions on the owner 's behalf. The company 's board of director 's position is to oversee management and ensure that the shareholders interest is being served. Corporate governance focus is with promoting enterprise, to improve efficiency, and to address disputes of interest which can force

A troubled economy filled by financial crises and scandals has expanded the concept of corporate governance. The Institute of Financial Auditors said that the Corporate Governance is constituted of processes and structures implemented by the board of directors to inform, direct, manage and monitor the operations of an organization towards reaching its goals. Internal audit tells us that an organization reach its objective by bringing a disciplined, systematic approach to improve and evaluate the effectiveness of risk management, internal controls and governance process.

It is well established that good corporate governance practice is beneficial for firms, its stakeholders and whole economy. Further based on studies such as by Levine (2004), saving rates, investment decisions, technological progress and consequently economic growth are encouraged as financial systems reduce market frictions. So developing countries require reforms to stimulate financial system for revival of economy.

Corporate governance is the relationship of large quantity participants of the corporations. Those participants usually occupy the important positions，which determine the performance and strategy of the corporations. The participants include shareholders and stakeholders, the company’s management that led by CEO, and the board (Robert and Nell, 2001). This definition showed different perspectives of corporate governance. First, corporate governance almost concentrate on the top management of the companies, although sometimes it may concern further down to the subsidiary management or the corporate insurance of the company. Second, it showed the responsibilities of each position, and showed each position responsibility for what. Third, corporate governance justify the benchmark about holding someone accountable and corporate governance also describes the process of how a corporation identifying the benchmark (Steger and Amann, 2008).

(Fernando, 2009) According to Cochran and Wartick (1988), corporate governance is an umbrella term that covers many aspects related to concepts, theories and practices of boards of directors and their executive and non-executive directors. Corporate governance concentrates on the relationship between boards, stockholders, management regulators and other stakeholders. (Maaseen, 1999) Monks and Minow (1995) define corporate governance as a relationship among various participants in determining the direction and performance of corporations. According to the World Bank, corporate governance is the blend of law which enable the corporation to attract financial and human capital, perform efficiently and thereby perpetuate it by generating long-term economic value for its shareholders while respecting the interest of stakeholders and society as a whole. The principle characteristics of an effective corporate governance is transparency; the disclosure of relevant financial and operational information and internal processes of management. More characteristics of efficient corporate governance involves protection and enforceability of the rights

Corporate governance applies to every aspect of the organization; it sets parameters for everyday transactions, employee relationships, rights and responsibilities, action plans, internal control, performance measures and corporate disclosure. it is the protocols which are implemented at any organization so that right and responsibilities are clear, no one’s interest is harmed or neglected and in case of a violation or complaint clear rules are present to judge the matter.

Most CG codes recommended that board of directors should be made up of a reasonable numbers of directors and independent directors as important factors in monitoring function (Abraham & Cox, 2007; Barakat & Hussainey, 2013; Elshandidy & Neri, 2015; Elzahar & Hussainey, 2012; Ntim et al., 2013). Theoretically, agency theory indicates that increased managerial monitoring associated with board structure (board size, CEO duality and NEDs) can have a positive influence on its control and monitoring activities, in addition, with the necessary skills to coordinate and be involved in a sub-committee devoted to risk management and enhance bank risk disclosure ( Sekome & Lemma, 2014; Healy & Palepu, 2001; Ntim et al., 2013) to mitigate information asymmetry (Bozec & Bozec, 2012; Elshandidy et al., 2013; Elzahar & Hussainey, 2012; Yatim, 2010). Similarly, resource dependence theory suggests that enhance board structure (board size, CEO duality and NEDs) offer greater access to their bank’s external environment, safeguarding the interests of all stakeholders by reduces conflict of interest among stakeholders and uncertainties and facilitates the securing of critical resources, such as finance and business contracts via enhance risk disclosure (Jia et al., 2009; Jizi et al., 2014). Also Elshandidy et al. (2013); Elshandidy and Neri (2015); Elzahar and Hussainey (2012); Mokhtar and Mellett (2013) argue that large board of

This project would not have been possible without the help and support of Mr. Shreedhar Bhat, our mentor for the project. Our deepest gratitude goes out to him for guiding us at various stages with attention and care. He has taken pain to go through our project and make the necessary changes when required. We extend our thanks to Prof. K. S. Subramanian - Director, SCMHRD for extending his support to us. We would also thank our institute

Corporate Governance refers to the way a corporation is governed. It is the technique by which companies are directed and managed. It means carrying the business as per the stakeholders’ desires. It is actually conducted by the board of Directors and the concerned committees for the company’s stakeholder’s benefit. It is all about balancing individual and societal goals, as well as, economic and social goals. Corporate Governance is the interaction between various participants (shareholders, board of directors, and company’s management) in shaping corporation’s performance and the way it is proceeding towards. The relationship between the owners and the managers in an organization must be healthy and there should be no conflict between the