Finance - Corporate Governance

Finance - Corporate Governance Essay example
Finance & Accounting
Pages 10 (2510 words)
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CORPORATE GOVERNANCE Table of Contents Table of Contents 2 Introduction 4 1.Corporate Governance – Definition 4 2.Importance of Corporate Governance 5 3.Problem of agency 6 3.1Contracts 6 3.2Management Discretion 7 3.3Incentive Contracts 8 4.Legal Protection 8 5.Large investors 9 5.1Large shareholders 9 5.2Takeovers 10 5.3Large Creditors 10 6.Conclusion 11 References 13 Introduction Corporate governance is a central issue for most of the companies operating in today’s globalised economy.


How do the investors of a company ensure that the managers of a company are not involved in stealing their money or making bad investments in some projects? How do the investors exercise their control over the managers of the company? This study discusses all relevant issues related to answering all these three questions mentioned above. The discretionary powers and regulatory controls of primary investors of an organisation like the shareholders and creditors of the company have all been discussed in this study. 1. Corporate Governance – Definition One particular formal definition cannot be assigned to the term “corporate governance”. It is used in many different ways. In general the term “corporate governance” describes a wide variety of issues which are related to the different ways through which organisational activities can be controlled and directed. Broadly speaking it deals with the code of conduct of the business activities followed by the companies. Corporate governance also constitutes wider issues which are related to improvements in the performance of shareholders. ...
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