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Principles and Theories of Corporate Governance help in shaping the performance of an organization positively.
Principles of Corporate Governance
1. Equal and fair treatment to all the stakeholders
2. Corporate accountability by explaining the actions and conduct of the organization
3. Responsibility of the Board of Directors in assuming and exercising their authority
4. Transparency and willingness to disclose information to the stakeholders
Characteristics of Good Corporate Governance
1. Full participation
2. Harmony and accord
3. Accountability
4. Transparency
5. Responsive nature
6. Inclusive
7. Effective
8. Follows law
4Ps of Corporate Governance
1. People – All stakeholders must clarify the people orientation of corporate governance.
2. Purpose – Measurable and actionable purpose that must be communicated to the stakeholders.
3. Process – Comply with all rules and regulations in process management, process innovation, and process compliance.
4. Performance – Measured and analyzed performance to achieve growth.
Benefits of Good Corporate Governance
To business
1. Transparency
2. Good corporate image
3. Creates CSR
4. Ensures ethical business activities
To organization
1. Improved employee commitment
2. Exemptions from the government
3. Improved company reputation and image
4. Increased repeat business
5. Minimizing fraud cases
To other involved parties
1. Informed shareholders
2. Fair employment policies
3. Quality products at fair prices
Issues in Corporate Governance
1. Internal controls and auditors
2. Quality of external auditors
3. Oversight in financial statements
4. Management of risk
5. Compensation review of senior management
6. Dividend policy
Theories of Corporate Governance
1. Agency Theory
Understand the relationship between agents and principals
1. Shareholder Theory
The management must work to meet the shareholder’s needs as this will generate wealth and will benefit society as a whole
1. Stakeholder Theory
Fair and honest treatment to all the stakeholders
1. Stewardship Theory
2. It argues in favor of a structure that will lead to a harmonious relationship between managers and owners
This video is on Principles of Corporate Governance and it has the following sub-topics.
Time Stamps
0:00 Introduction to Principles of Corporate governance & Theories
00:34 Principles of Corporate Governance
01:55 Characteristics of Good Corporate Governance
02:12 4Ps of Corporate Governance
03:21 Benefits of Good Corporate Governance
04:23 Issues in Corporate Governance
05:02 Theories of Corporate Governance
