WHAT IS CORPORATE GOVERNANCE?

THE BACKGROUND
Corporate governance is a relatively new term used to describe a
process, which has been practiced for as long as there have been
corporate entities. This process seeks to ensure that
The 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 (financiers,
customers, management, employees, government, and the
community).

FRAMEWORK OF CORPORATE GOVERNANCE:

The corporate governance framework consists of
(1)explicit and implicit contracts between the company and the
stakeholders for distribution of responsibilities, rights, and
rewards
(2)procedures for reconciling the sometimes conflicting
interests of
stakeholders in accordance with their
duties, privileges, and roles.
(3) procedures for proper supervision, control, and informationflows to
serve as a system of checks-and-balances.

THE BENEFITS OF CORPORATE GOVERNANCE:

Good and proper corporate governance is considered imperative
for the establishment of aCompetitive market. There is empirical
evidence to suggest that countries that have implementedgood
corporate governance measures have generally experienced
robust growth of corporatesectors and higher ability to attract

capital than those which have not.folloing are the main benefits of
good corporate governance

1. Good corporate governance ensures corporate success and

economic growth.
2. Strong corporate governance maintains investors
confidence, as a result of which, company can raise capital
efficiently and effectively.
3. It lowers the capital cost.
4. There is a positive impact on the share price.
5. It provides proper inducement to the owners as well as
managers to achieve objectives that are in interests of the
shareholders and the organization.
6. Good corporate governance also minimizes wastages,
corruption, risks and mismanagement.
7. It helps in brand formation and development.
8. It ensures organization in managed in a manner that fits the
best interests of all.