The Impact Of Corporate Governance On Firm Performance

2007 Words Aug 4th, 2014 9 Pages
Corporate governance is a model in which processes and relations by which corporations are controlled and directed. It can also be defined as a system of laws and authoritative approaches by which corporations are directed and controlled. This is achieved by considering the internal and external structures of the corporations. The intentions include monitoring actions of management and directors to moderate agency risks, which may be rooted in the misdeeds of corporate officers. This ensures that these risks and conflicts are prevented and moderated using policies, laws, customs, processes, and institutions that have great impacts on the way a corporation is controlled. This corporate governance has great impacts on firm performance, internationalization, and globalization.
Effect of corporate governance on firm performance
There are various factors that show the effect of corporate governance in firm performance that is the majorly role of board, quality of financial reporting and auditing, directors’ remuneration, risk management and corporate social responsibility. Duties of directors have been affected by corporate governance (Nini, Smith & Sufi, 2012). In this case, corporate governance reports have focused on building directors ' duties just as they have been defined in the statutory and case law studies of the directors. These have been known to entail fiduciary duties, which point out on acting out to the best interests of the company. It also defines the use of…
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