Transparency Is Key Aspect of Corporate Governance

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The boards of directors are responsible for the governance of their companies so there has to be transparency in company reporting. Transparency is key aspect of corporate governance because of implementing corporate governance this will allow stakeholders and shareholders to review and evaluate performance of management and the company this ensures that the board of directors and the executive directors of corporations act in the best interest of shareholders and the corporations. It is implemented like a form of company law it is put in place so shareholders are protected and also so that the company is run up to standards is making profits and it is a way shareholders and potential investors know they can trust the management. This is…show more content…
One of the aspects of corporate governance is making managers accountable to shareholders/stakeholders, as the shareholders are the owners of the company and the managers are seen to just run the company. This means the managers are required to justify their actions and will be held responsible for any activities/actions that will affect the company and share price, this will naturally cause conflict between shareholders and managers. This is because individuals who could not have prevented these results are unfairly punished. Accurate accountability is therefore important to stakeholders/shareholders and to achieve this accountability has to be used in combination with disclosure, legitimacy and responsibility.
Corporate governance helps improves accountability of a business and to stakeholders/shareholders because management regularly have to report, explain and be answerable for resulting consequences, which could lead to fines, termination of jobs etc. This is because shareholders can monitor and control company management, which corporate governance allows .It implements a comply or explain aspect, if management does not comply with certain regulations and shareholders does not agree with them then as a result it can sanction them because of noncompliance. They can do this because as it states in the Hampel report (1998) that accountability is the board’s first responsibility because it enhances the prosperity of the
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