Corporate Governance and Management

Running head: CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
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Introduction
Corporate Governance are the basic rules and guidelines which are laid down in a
company that is regulated by the directors of the company. The rules that have been made in
order to regulate the conduct and behavior of the individuals who are a part of the company those
rules are governed under Corporate Governance. In a company or any kind of corporation or
organization the management of the company needs to be regulated and therefore, there needs to
be an authority in the company who can regulate the management of the company. Therefore,
Corporate Governance is considered to be the process or that method by which the management
and the operations of a company are governed. The board of directors in a company are
appointed to manage and regulate the company and to carry out activities in a company which
would help the company in acquiring or obtaining the benefits. Therefore, the rules and
regulations that have been imposed on the company in order to govern the management of the
company is considered to be the method of corporate governance (Knudsen, Moon and Slager
2015). The shareholders of a company are considered to be the ones who invest in the shares of a
company and they appoint the directors in order to regulate the managing of the company. The
directors have certain duties regarding the company they are appointed into. They should be able
to work accordingly which would benefit the company but the benefits which are to be acquired
or obtained should not be in any dishonest way. The directors are appointed by the shareholders
of the company at times to carry out their self-interests in the country that would benefit the
shareholders as well as the company (Steger 2015).
This paper discusses the various aspects of corporate governance and the ethical behavior
of the individuals in a company. It discusses the various duties the directors have and the
composition of the board members in a company and the regulation which is to be done in the

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company and try to use those aspects. It would discuss the several principles and theories which
are related to corporate governance and try to implement them with the companies. It would
discuss the legal aspects of the corporate governance code and the significance of it. This paper
would then move towards discussing the ethical leadership and its significance, the integrity of it
in a company in compliance with the rules and regulations in a company. It also discusses about
the code of conduct in the company where the importance would also be discussed. In this paper
it tries to align the corporate governance structure with the corporate social responsibility. It
concludes by summarizing the discussion that was made in the paper and the outcome would be
laid down in conclusion.
Discussion
Corporate Governance is the method or the procedure in which the performance of any
company or organization is considered to be evaluated and regulated. In a corporate governance
structure the connection between the directors the shareholders and the management of the
company is looked after as they are the determining factors in an organization that would
determine the functioning and the operations of the company. Therefore, the connection between
these three factors are significant as they are considered to be the regulating the performance in
executing and implementing the working of the organization. The shareholders are considered to
be the people who have purchased the shares of the company and who would have the voting
rights in the company or the organization. The shareholders enjoy the power to vote in the
decision-making of the company and they appoint the Board of Directors in the company. The
Board of Directors act in accordance to the shareholders of the company and they have the
authority to regulate and govern in the matters which are related to the functioning of the
company (David Duffy 2019). The directors work in order to achieve or obtain any kind of

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benefits which the company would be able to accrue. It is upon the directors to function in a way
that would help the company benefit as an organization and therefore which would obtain profits
for the company.
Corporate governance is considered to be a process which would help an organization to
take strategic decisions which would be productive for that organization and it would be
effective. There are various significance or benefits if the process of corporate governance is
considered to be taken into consideration. The corporate governance structure helps in
safeguarding economic growth in a company and it assists in helping the company to grow
economically. The corporate governance structure tries to maintain the confidence of the
investors and tries to raise capital of a company or a corporation in order to grow as a business
(Camilleri 2015). A good structure of corporate governance helps in raising funds for the
company that would help the company as the share capital of that organization would rise and
therefore, this would boost the economy of the country. The good structure of corporate
governance assists the organization in raising funds or capital of that organization or corporation
which would help the company economically and motivate the employees of the company to
work towards achieving the best possible interests in the company (Haxhi and Aguilera 2015).
The corporate governance structure also effects the share price of an organization mostly
in a positive way. In this structure there are proper authorities given to the people and specific
duties and responsibilities provided to the individuals which would help the company or the
organization to work in a positive way and achieve the targets that are supposed to be achieved
in a positive manner. The corporate governance also considers to minimize the risk management
issue and provides for better safety procedures in a company or an organization. It also aims to
reduce the waste management in a corporation and tries to provide environmentally safe

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measures that would not be hampering the environment. Therefore, corporate governance
benefits an organization by assisting them towards achieving a better goal.
Various Theories of Corporate Governance
There are various theories in the corporate governance which can be implemented by
organizations in order to improve the work efficiency in the corporations. There are the agency
theory, the stakeholder theory, the transaction cost theory, political theory, stewardship theory
and lastly, the resource dependency theory. These theories are discussed in detail below.
 The Agency Theory: This theory discusses the relationship that is prevalent between an
agent and the principal and such a relationship is considered to be significant. An agent is
a person or an individual who is considered to work for the principal and to keep the
interests of the principal in mind. In an organization or a company the principal is
considered to be the shareholders of that organization who hold the shares of that
particular corporation they appoint the directors and the managers in an organization
which means that the directors or the managers of the organization work as agents of the
shareholders in that particular organization. The agents are considered to work in such a
manner which would benefit the organization as well as the shareholders of that
organization. The most distinctive characteristic of this specific theory is considered to be
that of the control and ownership. The ownership is that of the shareholders of the
company who invests and holds the shares in the corporation. The control of the
management is on the agents which are the directors and the managers of the
organization. Therefore, this is considered to be a distinct feature or characteristic of this
particular theory. The transparency and the accountability of the work are on the
management and the employees of that company.

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 The Stakeholder Theory: It discusses the accountability of the management and the
directors of the company to that of the stakeholders of the organization. This particular
theory focuses on the management decisions of the organization or the company. The
managers of a company are considered to be responsible towards a lot of people who are
a part of the organization such as the employees or the workers of the organization, the
stakeholders of the company, to the board members, investors, suppliers and others.
Therefore, the responsibility of the management is considered to be huge and the decision
making of the company matters needs to be discussed by the management to the selected
authority. In order to maintain the transparency and the accountability of the management
to the other members of the company consist of the stakeholder theory which would
depict the accountability of the management towards the members of the organization.
 The Transaction Cost Theory: In an organization it can be understood that there are
several contractual agreements between parties and this also involves the cost of the
parties in the agreement. Therefore, the transaction which is carried out by the company
or the corporation in order to grow in the organization is the transaction and the cost is
the price or the amount in which the company tries to transact while being in the market.
Therefore, this is considered to be the transaction cost theory. If the price in the market is
higher then the organization tries to pay for the transaction which would take place.
 The Political Theory: The company gives their voting rights or powers to certain
politically influenced personnel which would assist them by achieving benefits. This
political influence is considered to be beneficial because it helps in allocating power and
authority to a corporation or a company and it gives certain privileges along with
benefits. Therefore, this theory deals with the political influence of a corporation.