Corporate governance is the process and structure used to direct and manage the business and affairs of the

company towards enhancing business prosperity and corporate accountability with the ultimate objective of realizing long-term shareholder value, whilst taking into account the interest of other stakeholders. Corporate Governance refers to the manner in which the power of a corporation is exercised in the stewardship of the corporations total portfolio of assets and resources with the objective of maintaining and increasing shareholder value and satisfaction of other stakeholders in the context of its corporate mission. It is concerned with creating a balance between economic and social goals and between individual and communal goals while encouraging efficient use of resources, accountability in the use of power and stewardship and as far as possible to align the interests of individuals, corporations and society. Good governance is not simply about corporate excellence. It is the key to economic and social transformation. The corporation of today are no longer sheer economic entities. These are the engines of economic and social transformation. The Importance of Good Governance=If a country does not have a reputation for strong corporate governance practices, capital will flow elsewhere. If investors are not confident with the level of disclosure, capital will flow elsewhere. If a country opts for lax accounting and reporting standards, capital will flow elsewhere. All enterprises in that country regardless of how steadfast a particular companys practices may be suffer the consequences.

Internal Governance Internal Control of Organisation

External Governance Monitoring Systems of International Agencies, National Regulatory Agencies, Professional Institutes, Industry Associations & NGO

Result Appropriate Accountability & Responsibility to Stakeholders

Effective corporate governance requires a clear understanding of the respective roles of the board and of senior management and their relationships with others in the corporate structure. The relationships of the board and management with stockholders should be characterized by candor; their relationships with employees should be characterized by fairness; their relationships with the communities in which they operate should be characterized by good citizenship; and their relationships with government should be characterized by a commitment to compliance.

Accountability - Clarifying governance roles & responsibilities, and supporting voluntary efforts to ensure the alignment of managerial and shareholder interests and monitoring by the board of directors capable of objectivity and sound judgment. Transparency - Requiring timely disclosure of adequate information concerning corporate financial performance Responsibility - Ensuring that corporations comply with relevant laws and regulations that reflect the societys values Fairness - Ensuring the protection of shareholders rights and the enforceability of contracts with service/resource providers

Corporate governance is holding the balance between economic and social goals and between individual and communal goals. The governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. The aim is to align as nearly as possible the interests of individuals, corporations and society. The incentive to corporations is to achieve their corporate aims and to attract investment. The incentive for states is to strengthen their economics and discourage fraud and mismanagement.

The Difference Between Corporate Governance & Corporate Management Corporate governance and corporate management are related disciplines. Corporate management is the general process of making decisions within a company. Corporate governance is the set of rules and practices that ensure that a corporation is serving all of its stakeholders. For example, a corporate management team might decide that a company should purchase a new headquarters; a corporate governance policy would require that the company's CEO not have a relative work as the realestate broker on that transaction. Other People Are Reading 1. Corporate Management Development Corporate management has changed over time as managers have acquired better tools for understanding the problems they face. Most corporate managers are able to quantify many of the issues they consider, in order to make the correct decision. Managers factor in costs, benefits and the uncertainty of projects they are considering. A good corporate manager is someone who can perform sustainable functions within the company they work for, while either maximizing revenue or minimizing cost, depending on the department. Since the principles of corporate management are so broad, there are often specific disciplines for different parts of a company. The way a sales team is managed differs from the way the accounting department is managed. 2. History of Corporate Governance Corporate governance is a newer subject of study. In the past, many companies were run solely for the benefit of their managers or founders. A company might have outside shareholders, business partners and thousands of employees, but under older ideas of corporate governance, the company would pursue only the goals of their managers. Managers might choose to provide poor benefits for employees, knowing that these employees couldn't find better opportunities. Managers might also pay themselves excessive salaries without paying attention to community standards with respect to such practices. 3. Rise of Corporate Governance In recent years, many companies have become more conscious of the need for good corporate governance. As regulations have tightened, it has become more difficult for companies to exploit workers or harm the environment. In addition, changes in financial markets have made it harder for companies to harm their shareholders. A mismanaged company becomes vulnerable to being purchased by another firm, so managers tend to treat their shareholders better. An increased focus on sustainability as a business practice, not just an ethical position, has also affected corporate governance. Measuring Corporate Management Success Corporate management's success can generally be measured in terms of numbers. If the department in question is meant to create a profit (for example, if the entity being measured is a retail store or a factory), a

quantity like profit margin or return on investment can demonstrate that it is achieving its goals. For departments that don't have such responsibility (like a shipping department, or an accounting group), many managers measure their results in terms of cost. If a department can accomplish the same functions and spend less money, then by this measure, it's a success. Integrating Corporate Management and Governance In recent years, many management thinkers have tried to synthesize corporate management and corporate governance into a single discipline. Since corporate governance is meant to equitably distribute the results of good corporate management, they fit together naturally: the best situation for a company to be in is for it to have good governance and good management. Combining these can take a variety of forms, from giving workers representation in company management to pursuing more efficient manufacturing processes in order to cut costs and help the environment. The most effective companies combine these practices in a mutually reinforcing way.