CORPORATE GOVERNANCE

Corporate Governance



Abstract

The investigation is based on performing critical analysis of corporate governance in International context. The importance of corporate governance has been intensively discussed in introduction section. Discussion segment is based on examining the review of theoretical and empirical papers on the proportion of non-executive directors and chairman dual personality. I have discussed board diversity and firm performance under a separate head. A summary of board characteristics, which may enhance firms' ability to be triumphant internationally, has been analyzed in this document. Recommendations to improve the structure and performance of the organization have been discussed in conclusion section.

Contents

Introduction4

Discussion8

Empirical Study8

Non- executive directors; General issues9

Non-executive director (Theoretical study)10

CEO duality11

Board diversity and firms' performance12

Board characteristics and international sucess14

Conclusion15

Corporate Governance

Introduction

Corporate Governance is said to be a system or a tool via which entities regardless of its magnitude are directed as well as controlled. The control that the company requires is exerted by the camaraderie that exists amidst the company's board, its shareholders, as well as the stakeholders in order to ensure that there is no conflict of interest amidst the various stakeholders of the company. The process of preventing and maintaining an effective camaraderie amidst the stakeholders is termed as corporate governance. Corporate governance is also a set of principles and techniques to improve the management of commercial companies that appeal to the public's savings. It arises from the need to overcome the problems of separation between ownership and management in large publicly traded companies (McConnell, 1990, pp. 187).

Corporate governance serves to increase investor confidence in the stock market to facilitate the relationship between shareholders and managers of large companies. It aims to improve the functioning of organs. On one hand, it seeks to improve the organization of the board to monitor the management, for transparency in situations of conflict between the interests of shareholders and managers. For example, managers must report their salaries and those operations in which the managers themselves become suppliers or customers of the company. On the other hand, it also works to improve the organization and operation of general meetings to facilitate the exercise of voting rights and access to social information by minority shareholders (www.frc.org.uk).

Good governance is not a limitation on freedom of enterprise. On the contrary, through good governance is encouraged entrepreneurship. But it is mandatory to recognize the fact that good governance recommendations affect the exercise of power in listed companies. For this reason, they have to overcome the resistance of some managers of listed companies reluctant to disclose their salaries or conflicts of interest that affect them.

In the beginning it was left to the companies themselves to decide freely how to improve their management and how to prove compliance with the recommendations of good government. However, after numerous financial scandals of corporate governance self-regulation has been displaced by legislative intervention. In order to regain the confidence of investors in the stock market legal reforms such as Sarbanes-Oxley Act U.S. or the Transparency Law in Spain have come to incorporate in legislation the main rules of good corporate ...