Corporate Governance Of The Modern Day Corporations

3164 Words Feb 5th, 2015 13 Pages
CHAPTER ONE
1.0 INTRODUCTION

1.1 Background of the study
The situation in modern day corporations is that the people controlling those organisations are separate from those who actually own them. This agency condition hints why corporate governance has emerged as a major concern for corporate entities. Good Corporate governance practices, according to (Brown & Caylor, 2004) can no longer be ignored by businesses and corporate in the modern day business platform. Third world countries, Kenya included have risen to the occasion on the need to uphold corporate governance ideals in order to sustain modest growth. Corporate failures as well as fraud concerns in major organisations has ignited the Chorus to require accountability by directors (the agents), as well as appetite for stricter legislation that guards the interests of all stakeholders e.g. investors, creditors, and customers. Prudent corporate governance is key to enhancing the long term survival and profitability of organisations(Odera, 2012)

Corporate governance has been defined by (Council & Exchange, 2003) as the system of rules, practices and processes by which a company is directed and controlled. The concept essentially involves balancing the interests of the many stakeholders in a business entity who include its shareholders, management, customers, suppliers, financiers, government and the community (Bebchuk & Weisbach, 2012). The SACCO governance structure is made up of Annual General Meeting (AGM), Board…
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