Razaee, in his book Corporate Governance and Ethics, points out that
corporate governance is shaped by internal and external mechanisms
as well as policy interventions through regulations. Corporate
governance entails developing formal systems of accountability,
oversight, and control. Strong mechanisms lessen the opportunity for
an employee to make an unethical decision and has been proven that
it has a positive relationship with social responsibility. There are three
strong pillars of corporate governance that need to be recognized:
Transparency, accountability, and security. Some organizations view
corporate governance in a way that as long as they are maximizing
shareholder wealth and profitability, they are fulfilling their core
responsibilities (Mintz, 2016). In my career, I have experienced
stewardship theory, agency theory and capitalist theory. Currently,
however, I am working in a position where stewardship theory is
more valid than the other two. In stewardship theory, managers and
directors are viewed as stewards for their companies and have
fiduciary duty to act in the best interest of their shareholders.
Managers and directors choose interest of shareholders, perhaps
psychologically identified as the best interests, over self-interest,
regardless of personal motivations or incentives. I currently work for
local county government, and my director, regardless of how it makes
her look or our department, always does what’s right and in the best
interest of the board of county commissioners and the general
public/taxpayers. It is important that all of our locally elected officials
know and have trust in their finance department, not only for other
locally elected officials, but for the taxpayers to know their money is
being handled ethically and not being embezzled. We have a
neighboring county that a few years ago, one of their directors was
using his purchasing card in the utilities department, to purchase
tires, once the tires were received, he was selling them on the street
and from his home. With this information, our own BOCC decided to
do a restructure and moved some of the responsibilities from the
purchasing department to finance, where we are more closely knit as
a group, and question everything that slightly looks suspicious that
comes across our desk. We don’t do it for our own personal gain, we
do it for the benefit of the county, our elected officials, and our
taxpayers. For us, transparency and accountability are two very large
parts of our environment. Corporate governance is important
because it creates a system of rules and practices that determines
how a company operates and how it aligns the interests of the
stakeholders. Good corporate governance leads to ethical business
practices, which lead to financial viability (Investopedia.com, 2022).
Resources
Chen, J. (2022, August 26). What is corporate governance?
Investopedia. Retrieved September 15, 2022, from
https://www.investopedia.com/terms/c/corporategovernance.asp
Mintz, S. (2016). Ethical Obligations & Decision Making in Accounting +
Connect Access Card. Mcgraw-Hill Education.
