Why we need corporate governance to improve business behaviour

Why we need corporate governance to improve business behaviour

What is corporate governance?

Corporate Governance is usually a set of rules, controls and policies that are put in place in a company to dictate corporate behaviour. The company might set out different advisors and shareholders who are important stakeholders that can indirectly effect the corporate governance.

The board of directors have a vital role in the governance and can have a deep impact on the valuation of the equity.

Communicating a company’s corporate governance is important to the community and investor relations. In a company the board of directors are usually the direct stakeholders that have a big influence on the corporate governance. They are elected by the board members and represent the different shareholders the business has. The board of directors are there to make important decisions such as the dividend policies and corporate staff hiring. They can work outside of the financial aspect of the business if they are told by shareholder and can take up social or environment concerns.

The board is usually compiled of inside and independent members. The independent directors usually have experience in managing large companies. They are integral because they govern the concentration of power. They make sure that the shareholders interest is looked after. Insiders are usually the major shareholders, executives or founders.

Why we need corporate governance to improve business behaviour

  • Corporate governance helps improve business behaviour by looking at different attributes that help to access the performance level and put the framework into action. They will be able to point out the strengths and weaknesses of the company. They look at the processes that are put in place to ensure that the activities of the organisation are properly overseen.
  • Bad business behaviour can cast doubt on a company’s reliability and integrity with the shareholder which can have a negative effect on the company. The corporate governance will control any bad behaviour or scandals and help the company to progress. Companies that are not cooperating with auditors or are in trouble with the financial conduct authority will have to answer to the corporate governance to explain. Procedures will be put in place to ensure that the company comes out positive on the other side.
  • Corporate governance creates rules and controls that shareholders, directors and officers are all working towards one goal. Companies that are operating on a high level of governance progress more which is beneficial and profitable for the company. This demonstrates good ethical behaviour and environmental awareness.

If you are interested in a corporate governance course, why not check out London TFE. They offer various corporate governance training courses to ensure that you can put your corporate governance training into practice.

Confused about how corporate governance can improve business behaviour? Contact us to find out more about the corporate governance course we offer at London TFE.

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