Corporate governance observes the division of ownership and controls within
an organization. It is a method that guarantees a business has enough
supervision and control in order to perform in the best interests of its
shareholders. Although I have not directly encountered corporate governance
at work, I do believe that certain components are necessary for a business to
operate to its best potential.
In any corporation, it is essential to have a successful business strategy. This
component enables top executives and their team to plan ahead and take into
account their existing and upcoming duties. It will also result in the
establishment of a mission and vision statement for the company that explains
what the company does and what its primary goals are. This component would
encourage workers to consider the ethical decisions of their choices.
Employees should be motivated to take actions that will advance the business
because they have a clear grasp of the direction the business is taking, which
will ensure that the concerns of all stakeholders are taken into account.
Another crucial component of a company is oversight. A certain level of
supervision guarantees that top executives are operating in the interests of the
stakeholders. The board approves corporate strategies that are intended to
build sustainable long-term value (Business Roundtable, 2016). It may be
more difficult to provide good oversight without a Board of Directors,
although top executives can be assigned this responsibility. Employees may
feel more at ease when they know that there are management in control who
are keeping an eye on business operations and taking the necessary actions in
each case. Internal control is another factor that has the power to build or
damage a company. Internal controls are put in place to assist in the
recognition and advertence of fraud as well as the avoidance of false financial
reporting. The controls are made to ensure that rules are abided, laws are
upheld, and codes of ethics are taken into consideration.
Business Roundtable, T. (2016, September 8). Principles of Corporate
Governance. The Harvard Law School Forum on Corporate Governance.
Retrieved September 13, 2022, from
https://corpgov.law.harvard.edu/2016/09/08/principles-of-corporate-
governance/
Mintz, S. M., & Miller, W. F. (2023). Ethical Obligations and Decision
Making in Accounting Text and Cases (5th Ed.). McGraw Hill LLC
