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What is the impact of corporate governance in businesses?

What is the impact of corporate governance in businesses?

Corporate Governance is needed to create a corporate culture of consciousness, transparency and openness. It enables a company to maximise the long term value of the company which is seen in terms of performance of the company.

Directors, managers, shareholders and auditors who are stakeholders in the organisation, have clearly-defined responsibilities. For instance, whereas shareholders are responsible for approving the appointment of directors, company boards set strategic road maps and play oversight roles over the management of companies. As such, adoption of corporate governance enhances the supervisory and managerial capacities of business organizations.

The list below provides a bird’s-eye view of corporate governance in action, and conveys the extent to which it can influence business. To help organisations navigate corporate governance, the Governance Framework outlines the board’s objectives and responsibilities, and how they relate to the corporate governance infrastructure.

  • The company’s performance and the performance of the board
  • The relationship between the board and executive management
  • The appointment and assessment of the board’s directors
  • Board membership and responsibilities
  • The “ethical tone” of the company, and how the company conducts itself
  • Risk management, corporate compliance and internal controls
  • Communication with the shareholders
  • Financial reporting

Corporate governance has immense value, whether a business is family-run, a nonprofit or a publicly traded company. That’s one of the reasons why corporate governance is top of mind for so many business professionals. Above all, the role of corporate governance in organisations is to demonstrate these key principles to shareholders, stakeholders and the public.

Looking for corporate governance training? Read about our corporate governance training courses, get in touch with one of our specialists to find out more about the corporate governance course we offer at London TFE.

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