FINANCIAL MANAGEMENT

Financial Management

Corporate Governance

Introduction

The corporations are the sum of three distinct elements which are employees, structure and resources. The corporations used to raise the capital through debt and shares issuance. Therefore, it can be inferred that the corporations use money of investors and general public. The projects which the company used to undertake are on the discretion of management which usually have negligible amount of investment in company. It creates room for doubt because management is not investing its money. The corporations are vital to provide employment, finish goods and services. In the light of aforementioned points, there is a high need of effective corporate governance (Amy et.al, 2001, pp. 137). The term corporate governance can be defined as framework of rules and practices by which a board of directors ensures accountability, fairness, and transparency in a company's relationship with its all stakeholders such as financiers, customers, management, employees, government, and the surrounding community (Beattie et.al, 2001, pp. 22).

The corporate governance framework is a very comprehensive document that contains explicit and implicit contracts between the company and the stakeholders for distribution of responsibilities, rights, and rewards. It also describes the procedures for reconciling the conflicting interests of stakeholders in accordance with their duties, privileges, and roles. The corporate governance also covers procedures for proper supervision, control, and information-flows to serve as a system of checks-and-balances. The report will focus on “right move company” which is listed in London stock exchange in the context of its corporate governance practices. The report will critically evaluate the corporate governance practices of the underlying company (Bernadette, 2001, pp. 145),

Discussion

The framework of the right move company is very effective in term of balancing power among executive and non executive directors. It is very essential that there must be a balance of power among top management of the company. The top management of the company possess much power to make and alter the decision. If the power of the management is inclined towards a particular director or particular group of director then there are higher chances that the director would get involve in theft or fraud (Cahn et.al, 2010, pp. 12). The non executive directors are independent for managing their responsibilities and taking decision. This enables the non executive directors to take in-debt view of the operations because they posses power of inquiring the middle level management (Cheah et.al, 2007, pp. 437).

There was lot of criticism on one non executive director. The argumentors claimed that one of the non executive director is little doubtful because in the time period of being non executive directors he was also serving an employee of Lloyds banking group. The issue rose because Lloyds banking group was a customer of the right move. Moreover, the Lloyds banking group also owned a company name Halifax Estate Agencies Ltd which was a shareholder of the right move company. The argumentors argued that there are high chances of fraud because the loyalties of that particular non executive director are divided among the right ...