Corporate governance is a system of rules, regulations and practices that are
used to direct and manage companies. They help to guarantee that sufficient
supervision and controls are in place within a corporation so that it operates in
the best interests of the shareholders. Essentially, governance systems
empower shareholders and ensure that the companies they are invested in act
and make decisions responsibly. Boards of directors are a huge part of this and
work to ensure that, “the company's corporate governance policies
incorporate corporate strategy, risk management, accountability,
transparency, and ethical business practices.” (Chen, 2022). Some of the main
principles of corporate governance are transparency, accountability,
responsibility, and risk management.
Transparency denotes that the company must provide, timely, precise, and
clear information about its financial health, growth expectations and any legal
issues to its shareholders and investors. This helps to assure that any member
of the public investor or not, may monitor a company's activities and financial
health at any time. Accountability is critical as it outlines the purpose of a
company’s activities and then also the results of its actions. Tying into
accountability is responsibility, which is meant to ensure that the company is
acting in the best interest of its shareholders and consumers as well as striving
to be successful. Together these two principles work to boost shareholder
confidence and promote internal growth that is for the good of the company.
Lastly there’s risk management, wherein the board must establish all risks that
may be a threat to the company and decide on the best way to control them.
These risks must be documented and presented in the company’s statements
so that anyone who needs to review them has access to them. b
Good governance can be achieved through ongoing communication that
works to cover all the factors involved in ensuring that investors and
shareholders’ interests are met and represented in policy efforts. The company
I currently work for is going through a lot of growth at the moment, and things
are being forced to change at a rather accelerated rate. Unfortunately, for a lot
of employees here, it feels as though there is a severe lack of internal
transparency as new positions are being created, and a lot of people aren’t
exactly sure what their job titles are anymore as things keep expanding.
Resources:
Chen, J. (2022, August 26). What is corporate governance? Investopedia.
Retrieved September 14, 2022, from
https://www.investopedia.com/terms/c/corporategovernance.asp
Mintz, S. M., & Miller, W. F. (2023). Chapter 3 Organizational Ethics and
Corporate Governance . In Ethical obligations and decision making in
accounting: Text and cases. essay, McGraw Hill LLC.
