CORPORATE GOVERNANCE

CORPORATE GOVERNANCE

Corporate Governance and the UK Corporate Governance

Introduction

The origin of sustainable development is only trust. Due to globalization, mutual interdependence has been increased and each country needs to mobilize their limited resources for better outcome and success. In order to accomplish this, trust is the only factor which can assist for accomplishing this goal. Hence, gaining trust of the global financial market and stakeholders has turn out to be the main success key. The corporate governance essence is to ensure trustworthiness i.e. strong relationship between stakeholders and corporations. The theme of the paper is UK Corporate Governance that will cover its importance with UK corporate governance code with sub division of its main Principles.

Discussion

Corporate Governance

Corporate Governance is the set of principles, systems and processes through which company is governed that is company is directed and controlled. In order words, Corporate Governance offer proper guidelines for running a company i.e. how company would be directing and controlling their operation in order to fulfill their objectives and goals in such as way that they can add value to company and also advantageous for each stakeholder in long-run. Here stakeholders are those people that are involved directly or indirectly in company's operation i.e. from Boards of Directors, employees, management, customers, society, vendors, suppliers etc. Company management role is of trustee towards others. According to researchers, good corporate Governance comprises of culture and climate of Responsibility, Consistency, Transparency, Effectiveness, Fairness and Accountability which is all through the organization (Mallin, 2012, p. 3).

Why is it important?

As it is known that corporate governance is ways through which company increase their accountability and evade enormous disasters prior to their occurrence. It offers and increases the confident level of the investors towards the company. It is the criteria that have been given more importance from foreign institutional investors when they decide to invest in particular company. Moreover, it is important due to the fact that it has a positive influence on company's share price. The fact that corporate governance enhanced the company's accountability has been proved with the cases that happen previously such as failure of energy giant Enron a long with its bankrupt employee & shareholders has been the major and most important dispute for the corporate. Well executed corporate governance shall be same as to the internal affairs unit of police department that is weeding-out and removing issues with tremendous unfairness. Internal members meeting could be arranged by company's management like share-holders and debt-holders along with customers, community leaders and suppliers in order to address the requirements of affected parties (Gugler, 2012, p. 5).

The role of corporate governance has also been increased due to 2002- Sarbanes-Oxley Act in the U.S. This action was taken in order to increase and restore public confident in markets and companies subsequent to accounting frauds that was bankruptcy of high profiled companies like WorldCom and Enron. Due to this, companies have been striving high level corporate governance. Companies have not yet been limited to achieve ...