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Corporate Governance (Repaired)

Corporate Governance (Repaired)

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Published by M Yasir Hassan
Proposal on corporate governance and stakeholders satisfaction
Proposal on corporate governance and stakeholders satisfaction

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Published by: M Yasir Hassan on Oct 11, 2012
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Impact of Corporate Governance on Stackholders Satisfaction
1.1
 
Background
Much of the world‟s public attention of the early
years of the 21st century had it origin in failureswithin Big Multinational Corporations such as Enron or Parmalat, that evidenced that thefunctioning of certain elements of late 20
th
century Corporate Governance models based onmaximisation of 
shareholder‟s interests, were not able to ensure
sustainable development of Corporation activities (Berle, 1931). Corporate governance through the protection of a wider setof interests can be regarded as an alternative way of efficiently conducting CorporateGovernance.Taking into consideration other
stakeholders‟ interests is often regarded as fairly
recent indevelopment, and Freeman is generally cited as its landmark. However neither this idea normany of its practices are new. From a philosophical standpoint it has been related with expansionof democratic ideas (Buchholz & Rosenthal, 2002). From a practical perspective, 21
st
centurychocolate manufacturers in Europe devised ethics codes and built model factories to the benefitof their workers, supplied health and adult education facilities and reduced the length of workingweek. In the USA pharmaceutical such as Merck developed Codes of conduct, which underlined
the Corporation‟s goal to serve pu
blic
health. These two are just a sample of Corporations‟
 respect for constituents other than shareholders (Cooper, 2009). More recently, academic andpractical interest
for “other constituencies” approach to
 
Corporations‟ management has evolved
in parallel with the critics of Corporate Governance theories that evolve around the maximisationof short-term revenue to shareholders. It has occupied much of the academics works in the lastdecade. Sometimes it
appears “hidden” behind terms such as Corpora
te Social Responsibility,corporate citizenship, corporate accountability, or triple bottom line (of environmental social andfinancial reporting), in other occasions it is used as a rebrand to
Corporation‟s charities and
donations. Many Corporations have started to formalise their practices and to publicise them(Dodd, 1932).Most Fortune 500 companies make their Social practices known through their Web sites andPublic Relations materials, and have adopted policies and codes and have acted in consonance
 
Impact of Corporate Governance on Stackholders Satisfaction
with the goals of sustainable good governance. It is difficult to decide whether they have actedsimply in order to promote their contribution to community development or to gain and sustain acompetitive advantage. The Body Shop promotes community trade, opposes animal testing,defends human rights, and protects the environment (Druker, 1994).
1.2
 
Problem Identification
Corporate governance is the system by which companies are directed and controlled. It involvesregulatory and marke
t mechanisms, and the roles and relationships between a company‟s
management, its board, its shareholders and otherstakeholders,and the goals for which thecorporation is governed. In contemporary business corporations, the main external stakeholdergroups are shareholders, debtholders, tradecreditors,suppliers, customers and communitiesaffected by the corporation's activities. Internal stakeholders are theboard of directors, executives,and other employees. Much of the contemporary interest in corporate governance isconcerned with mitigation of the conflicts of interests between stakeholders. Ways of mitigatingor preventing these conflicts of interests include the processes, customs, policies, laws, andinstitutions which have impact on the way a company is controlled.
 
An important theme of corporate governance is the nature and extent of accountabilityof people in the
business
.
1.3
 
Problem Statement
Corporate governance plays a vital role in shaping the future of the company, its business,performance, and ultimately its stakeholders. The
stakeholder‟s
satisfaction is also veryimportant for the future business of the company, because stakeholders are satsified mainly dueto the performance of the company, which results in rising of the shares prices because of goodperception of the company in the minds of the different kinds of stakeholders and literature tellsus that good corporate governance increases the satisfaction of stakeholders. So
stakeholder‟s
 satisfaction is very important and that is why this would find out how corporate governanceimpacts the satisfaction of different kinds of stakeholders.
 
Impact of Corporate Governance on Stackholders Satisfaction
1.4
 
Objectives of the Study
The main objective of the study is to find out the relationship between the independent variable,Corporate Governance, with the dependent variable, Stakeholders Satisfaction. The goals of thestudy are listed below:
 
To examine the relationship between corporate governance and customers satisfaction.
 
To examine the relationship between corporate governance and suppliers satisfaction.
 
To examine the relationship between corporate governance and creditors satisfaction.
 
To examine the relationship between corporate governance and employees satisfaction.
 
To examine the relationship between corporate governance and communities satisfaction.
 
To examine the relationship between corporate governance and goverment satisfaction.
 
To examine the relationship between corporate governance and investors satisfaction.
 
To examine the relationship between corporate governance and shareholders satisfaction.
1.5
 
Need of the Study
This study will be an important endeavor in improving the importance of this concept in thecorporate world. It would bring several benefits to many parties like corporate managers,shareholders, creditors, suppliers, and communities in forming their plan of actions and also tothe existing literature.This study can provide the management an understanding of the factors that could affect
stakeholder‟s
satisfaction in the context of corporate governance, which would ultimately impactorganization performance and make organization a profitable entity. Also this can be useful forcompanies to draft strategies which would help in increasing
stakeholder‟s satisfaction in the
benefit of the corporation.
1.6
 
Significance of the Study

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