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Corporate Governance

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Essay title: Corporate Governance

Corporate Governance

Corporate Governance is the relationship between the shareholders, directors, and management of a company, as defined by the corporate character, bylaws, formal policies and rule laws. The corporate governance system was designed to help oversee the decisions and best interest of the shareholders. The system should works accordingly: The shareholders elect directors, who in turn hire management to make the daily executive decisions on the owner’s behalf. The company’s board of director’s position is to oversee management and ensure that the shareholders interest is being served. Corporate governance focus is with promoting enterprise, to improve efficiency, and to address disputes of interest which can force upon burdens on the business. Ensuring that the clearness, and truth in a company’s business can make contribution to improving the enterprise standards and public governance.

What created corporate governance is still a question of debate? It is a developing order control system, and one in which little has been rearranged from the outlook of developing and transition economies. From the corporation’s outlook, the developing system’s general agreement is that the purpose of corporate governance is to increase the firm’s value, subject to meeting the corporation’s financial and other legal obligation. They believe that the extensive meaning stresses the need for boards of directors to balance the interest of capital providers with those of stakeholders in order to achieve long term maintained commercial success. While on the other hand, the public believe the purpose of corporate governance is to nature the spirit of the company while ensuring accountability for the exercise of power and special privileges by the firm. The role of the public policy is to provide firms with the incentives and discipline to minimize the difference between private and social returns, and to protect the interest of stakeholders.

Corporate governance has become an issue of worldwide importance. Corporations have a role to play in promoting economic development and social progress therefore they must have the best members on the board to assure good standards. Board members and directors should possess certain characteristics that will allow them to make good decisions for the firm. The appropriate characteristics should be possessed by each candidate of the board before they are elected. Firms must also consider the ability to obtain an authority position, how an individual accept change of profession, how many outside directorship an individual may be involved in, invest abilities, and how they handle conflict of interest. Boardrooms are changing. Directors can no longer be passive. They must be alert, accountable and active. The board’s performance has come under more scrutiny. Shareholders, members and staff expect more from their boards.

Individual directors of the corporate governance board should possess all of the

following characteristics:

• Integrity and Accountability

• Informed Judgment

• Financial Literacy

• Mature Confidence

• High Performance

• Passion

The board as a whole should possess the following core competencies, with each

member contributing knowledge, experience and skills in one or more domains.

• Accounting and Finance

• Business Judgment

• Management

• Crisis Response

• Industry Knowledge

• International Markets

• Strategy & Vision

Companies are becoming more involved with corporate

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