Principles Of Corporate Governance

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Corporate governance is the system of rules, practices and processes by which a company is directed and controlled. Corporate governance essentially involves balancing the interests of a company's many stakeholders, such as shareholders, management, customers, suppliers, financiers, government and the community. The definition of corporate governance most widely used is "the system by which companies are directed and controlled" by Cadbury Committee (1992). The framework of rules and practices by which a board of directors ensures accountability, fairness, and transparency in a company's relationship with its all stakeholders. Governance refers specifically to the set of rules, controls, policies and resolutions put in place to dictate corporate behaviour. The Organisation for Economic Cooperation and Development (OECD) Principles of Corporate Governance define Corporate Governance as “a set of relationships between a company’s management, its board, its shareholders and other stakeholders. Corporate governance also…show more content…
Lowering risk in the company Through corporate governance, scandals, fraud, and criminal liability of the company can be prevented or avoided altogether. Since the people involved in the organization know what they are accountable for, the actions of one person doesn’t mean the downfall of the entire corporation. Corporate Governance identifying what the roles in the corporation so that it can allows decisions to be made that won’t have a negative effect on the overall corporation, and it means that the offender can be much more quickly identified and punished instead. ii. Public acceptance A company with corporate governance is widely accepted by the public due to the idea of disclosure and transparency that comes with corporate governance. With full disclosure and the ability for people who work in the business to get information, as well as the general public, there is a higher level of
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