corporate governance

Category: Education

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What is corporate governance?:

What is corporate governance? The concept of corporate governance gained wide popularity in 1990s to improve the effectiveness of corporate enterprises. “Corporate governance is about promoting corporate fairness, transparency and accountability” - J.Wolfensohn “The corporate governance is the system by which business corporations are directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, such as the board, managers, shareholders and other stakeholders and spell out the rules and procedures for making decisions on corporate affairs. By doing this it also provides the structure through which the company objectives are set and the means of attaining those objectives and monitoring performance ”

Corporate governance & corporate management:

Corporate governance & corporate management corporate governance defines the way a corporate enterprise should be governed. It describes corporate values, norms and ethics. It directs the development of corporate enterprise. Corporate management deals with management (planning and organising ) of corporate enterprises within the framework of its governance.

Objective of corporate governance :

Objective of corporate governance to align corporate goals with goals of it stakeholders. To strenghten corporate functioning and discourage mismanagement. To specify responsibility of B.O.D. and managers in order to ensure good corporate performance.

Need for corporate governance :

Need for corporate governance Separation of ownership from management Gloabal capital Investor protection Foreign investments Financial reporting and accountability Globalization of economy

Corporate governance and organisational success :

Corporate governance and organisational success raise organisation to the new heights vision mission values top management corporate success

Contd- :

Contd - Maintain good relations with stakeholders Motivate employees a. vision b. mission c. goals d. objectives develops plans to achieve the objectives Define the authority and responsibility of managers

Code of corporate practices :

Code of corporate practices Code of practice the CEO and chairperson of the BOD should be separate The CEO is responsible for managing day to day operations of the company and chairman should manage the affairs of the board. He should be empowered to hire and fire the CEO if it is in the interest of the company. The organisation should have non executive directors to the advantage of their experience and expertise. While these directors are not part of the board , they hold senior executive positions in other companies.

Corporate governance in india birla committee report :

Corporate governance in india birla committee report In india this report was put forwarded by the birla committee . The main objective of this committee to protect the interest of stakeholders for a long term. The main recommendations – B.O.D- the objective of B.O.D. is to develop the strategy , maintaining good relations, protecting companies assets and fulfulling all the legal requirements. Audit Committee- the audit committee is responsible for their financial reporting. This committee should have access all the financial information, the purpose of this committee is to present the correct and sufficient and credible financial information. Remmuneration committee- this committee determines the pensions rights and compensations payment to the directors.

Contd- :

Contd - Accounting standards and financial reporting- companies are required to present a). Consolidated accounts for all subsidiaries and b). Financial reporting for each of their products segments so that shareholders have a complete financial picture of the company in a one statement only. Management- Shareholders-