explain the need for corporate governance?
Corporate governance is about the way in which boards oversee the running of a company by its managers, and how board members are in turn accountable to shareholders and the company. [ This has implications for company behaviour towards employees, shareholders, customers and banks. Good corporate governance plays a vital role in underpinning the integrity and efficiency of financial markets.
Poor corporate governance weakens a company’s potential and at worst can pave the way for financial difficulties and even fraud. If companies are well governed, they will usually outperform other companies and will be able to attract investors whose support can help to finance further growth. There is the need for corporate governance mainly because corporate governance balances the interests of, and relationships between, a company's employees, owners and customers to ensure the long-term sustainability and success of a corporate venture.
As corporate governance develops as an independent field of study and professional practice, nearly all aspects of a corporation's operations fall under this umbrella term. Human resources and public relations departments play an increasingly important role in the governance structure of a corporation. As public and legal expectations of corporations evolve, so must a corporation's governance structure.
Business ethics are integral to the integrity of a corporate governance structure. Policies and procedures originating from ethical, responsible decisions maintain the immediate and long-term health of a corporate enterprise.
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