Strengths And Weaknesses Of Corporate Governance

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A)Corporate Governance is a structure of the company by balancing all the individual, corporation and society interest. It also helps to create relationship between company board, shareholder and stakeholder and have proper functioning of organization to prevent fraud. Board of director in the company is being appointed by the shareholder and was been audit by them if the director managing and operating the business well by reporting or having general meeting. The responsible of the board of director are achieving the company objective, provide leadership and supervising the management and reporting the shareholder about the achievement and problem. All action of the board are subject to laws, regulations and shareholder. There are various theories that underline the development of corporate governance which include Agency theory, Stakeholder theory, Stewardship theory, etc.

According to (Jill Solomon, 2013), agency theory is “defined the managers of the company as the ‘agents’ and the shareholder as the ‘principal’ ”. Which mean that principal hire & assign the decision making and operating to the agent by the their own interest. However in agency theory, most …show more content…

In case of Walt Disney, the decision made by Eisner, it does not provide any risk reporting to shareholder, whereby it does not seek agreement of the shareholder that the action made if it is for the best interest of the shareholder or Eisner himself. It recommended to encourage accountability by having a proper risk management controls and strategy. It will help the organization achieving of growth by having a proper planning and evaluation of risk of the impact to have a correct action with agreement of everyone and monitoring all the task regardless of large or small that is delegated. This will help the company to have appropriate system of internal control and increase of accountability within the

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