CORPORATE GOVERNANCE

Corporate Governance in European Union

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BACKGROUND AND RATIONALE1

1.1Background of the Study1

1.2Rationale of the Study1

1.3Literature Review2

1.3.1Corporate governance2

1.3.2Urgency of Corporate Governance3

1.3.3Basic Principles of Corporate Governance3

1.4Summary of Key Debates4

RESERACH QUESTIONAS AND THEIR RATIONALE5

2.1Research Questions5

2.2Explanation and Justification of Research Aims and Objectives5

METHODOLOGY6

3.1Research Design and its Appropriateness6

3.2Theoretical Framework6

3.3Advantages of Secondary Research6

3.4Limitations of Secondary Research Method7

References9

Corporate Governance in European Union

BACKGROUND AND RATIONALE

Background of the Study

Corporate finance can be defined as the set of structure or the processes that is aimed to direct and control the operations of the companies. In addition to it, corporate governance embraces crucial relationships among the board of directors and the management of the company. Corporate governance caters the issues of all the stakeholders of the company including small shareholders with the intention to enhance the sustainability of the business as well as to ensure the economic development by attempting to burnish the performance of the companies. Though, it should be taken into account that the intention of the corporate governance is to improve the bonding between the board of directors, management as well as stakeholders in order to increase the outside capital for the business to bring prosperity in terms of financial incentives or increased capital. It is crucial to understand that the concept of corporate governance is notorious in nature and can be defined in a broader sense by extricating the internal relationship of the company with its shareholders including the conflicts between the investors as the shareholders (Ferrarini & Wymeersch, 2006, p. n.d).

The urgency of corporate governance has been increased with the increase in globalization in the context of contemporary business environment. Though, It should be noticed that the urgency of corporate governance in even more sharp in the context of European business due to the fact that most of the companies in European countries do not only concerned about their investors, employees and board of directors but they are also concerned for their social responsibilities (Becht, Jenkinson & Mayer, 2005, p.157). It is crucial to highlight that the corporate governance and the corporate social responsibility is the trigger that helps in inducing positive image of the company in the market. Eventually, it burnishes the competitiveness of the business as well as it helps in enhancing the economic development of European countries. Though, in order to ensure the good governance practice, it is crucial for the businesses to adopt efficient social as well as environmental reporting system along with the pre defined code of conduct and guidelines of conducting business within European countries. Companies can gain and sustain competitive position as well as they can achieve long term profitability by following the code of conduct of EU approach to corporate governance. Though, it should be taken into account that some alterations are required in the EU guidelines of corporate governance in order to increase the profitability of the companies as well as to achieve the targets of high economic growth in order to compensate the damages of the crises faced by European countries during last ...