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Jevin k. Kiriago
Student (MBA)
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Why the Interest in Corporate Governance Today?
According to my own understanding, corporate governance are the rules, regulations governing the running of an institution, the reasons on the need for corporate governance is to mitigate losses which arise due to corruption or fraud.
I'm trying to research on the reasons for the interest in corporate governance. Please members help me in building up on this topic.
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Here we exchange knowledge and experiences in the field of Corporate Governance.
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Sibiya Kudzanai
Manager, Zimbabwe
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Reasons for Recent Interest in Corporate Governance The collapses of large organizations such as Worldcom, Enron, etc. and more recently several banks due to the financial crisis, as a result of corruption and mismanagement of these organizations and lack of supervision by public institutions, has resulted in more attention to corporate governance with the intention to minimize these collapses.
These collapses have far reaching economic and social consequences such as loss of millions of jobs, income and deterioration of living standards.
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E Benshetler
Project Manager, United States
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Why Focus on Corporate Governance? The Impact of the Few on So Many Corporate governance in part addresses the agency problem that arises when ownership is separated from management. In other words, how do the owners ensure that the actions of the managers (particularly the top managers) are aligned with the owners' goals? This is not strictly to mitigate losses, but also to guide the firm in the positive direction of achieving certain goals.
One special reason for the recent strong interest in this field is that, as @Sibiya Kudzanai mentions above, a relatively small number of people in the top levels of the firm (Board of Directors, CEO/GM, and the TMT - top management team or group), can have a major effect on the prosperity and survival of the firm and its numerous stakeholders (stockholders, employees, customers, suppliers, neighbors, etc.) as well as its industry.
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K.Narayana Moorthy
HR Consultant, India
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Why Focus on Corporate Governance Today? Today in the business world 3 factors have become more relevant:
1. Cost & risk reduction in business operations.
2. We have limited resources.
3. Anti-Capital Sentiment.
All three aim at LONG-TERM growth of the enterprise. Considering the above, corporate governance has a very important to play:
- It helps streamline the process and gives people accountability
- It helps to establish a correct decision making process.
- It clearly explains to the board, stakeholders and the shareholders what their duties and responsibilities are within the company.
- Knowing these roles and responsibilities, the key people within the enterprise can understand what they are held accountable for.
- Accountability helps people within the enterprise to make the right decisions.
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