CORPORATE GOVERNANCE The Oxford English Dictionary defines ‘governance’ as ‘the act, manner, fact or function of governing, sway, control’. ‘To govern’ is ‘to rule with authority’, ’to exercise the function of government’, ‘to sway, rule, influence, regulate, determine’, ‘to conduct oneself in some way; curb, bridle (one’s passions, oneself)’, or ‘to constitute a law for’. Governing is, therefore, a whole range of actions, initiatives and response patterns - from rule through influence to self-control and self-regulation. By inference it includes ‘driving’ as well as ‘steering’. Therefore, in seeking to define governance and the purpose it is to acheive, it is necessary to give adequate consideration to its antitheses – ‘freedom’ and ‘individualism’. Governance as such has been largely taken for granted in the past. Something that does not require a systematic and detailed analysis, ‘efforts’ or ‘commitment’ of resources. For most of human existence governance has been imposed on the majority by a small elite, this form of governance depended on curtailing the freedom of the ruled in order to maximize the power of the rulers. The monopolizing of power by rulers made it virtually impossible for defects in governance either to be recognized by the ruled or to be challenged by them. Governance has gone by default since regimes did not share decisions with their subjects but left them to suffer the consequences of failure. In more recent times the growth of democracy together with the waning of communism and other extreme regimes has led to increasing concern at undue concentrations of power and its misuse. The loss or depreciation of long – accepted models has created intellectual turmoil and a search for better processes of governance. Thus emerged the modern concept of governance based on the foundation that untrammeled personal freedom is akin to lawlessness. Such an employment of personal freedom requires a strict internal discipline or self – governance that is rare. If we admit the concept of original sin, we are faced with the need for a code of morality and a process of self – governance. As Geoff Mulgan suggests ‘morality is a word that can be notoriously abused’. Thus making self – governance an imperfect art and a shaky foundation for the governance of ‘ groups ‘. As corporate’s realised this, new models of governance came to the fore... ... middle of paper ... ...ards and auditors; · Traditionally, a company’s directors have been tasked with the role of choosing and monitoring its managers. But this is a moot exercise unless the directors also have the power to effect change. Directors should go beyond a basic “watchdog” role, to foster effective policies and act in a strategic capacity. Ideally, directors should have a recognized role in governing the corporation. Companies are increasingly reliant on the wider community which surrounds them, which in turn needs the support and resources which few others apart from companies can give. This is a stakeholding relationship which good governance needs to recognise and which can make a company distinctive to those who deal with it. Companies which share values with their wider communities are likely to generate sustainable profitability to share with them also.New structures are needed to reflect new and more complex relationships. Today, at the close of the century, corporate governance is still an important tool for monitoring performance and enhancing value even though the ultimate shape of this tool is in the process of being forged.
Over the course of the semester, the class has discussed a variety of theories about legitimacy and government. In Hobbes, authority hinges on the Leviathan, with Locke, authority rests on the people and with Rousseau, an extreme version of Locke. Yet in each case, there appears to be a focus on one individual or one group of people. What institutions can enforce that the group who possesses legitimate power do not overstep their authority? Charles de Secondat, Baron de Montesquieu advocates for a solution that results in a system of government that has the sovereign not abuse his or their power. Thus, a system of checks and balances.
Conceptual model of good governance in the world’s view Based on the literature reviewed, this study perceived the following model of good governance (GG) in view of the world as depicted in Equation 1: GG ≈ PSL ↔ ES ↔ BS (Equation 1) Where GG = good governance; PSL = political system and leadership; ES = economic system; BS = bureaucratic system. Equation 1 clarifies that good governance is approximately equal to its three main components that are political system and leadership, economic system and bureaucratic system. However, this perception or view of good governance is yet not confirmed or final. Therefore, literature acknowledges that yet good governance is indeterminate. Conceptual model of good governance in the Holy Quran
There are many theories pertaining to the nature of power in society. In modern society, it is important to identify where and when power is exercised, who benefits and who suffers from it being exerted upon them. In this tradition, it is useful to examine the managerialist perspective.
...argues here that through critique one can find cracks in the power-knowledge relationship. At this point the public will be able to ask the question “how not to be governed like that”?
The fundamental, uncontested concept of democracy ‘rule by the people.’ Direct democracy, ‘self-rule’, was born in ancient Athens in the 5th century BC. Direct democracy, as defined by Hague, is “a system of government in which all members of the community take part in making the decisions that affect that community.” (Hague et al 2016, 39). Its goals were popular involvement, open deliberation, and educated citizens with an understanding of the public good (Hague et al 2016, 39). This is a normative goal, however impracticable in reality. Thus, different conceptions of democracy have come to the fore.
Bibliography: Turnbull, S. (1997). Corporate governance: its scope, concerns and theories. Corporate Governance: An International Review, 5 (4), pp. 180--205.
are generally people hired on the basis of competitive examinations, promoted on the basis of the judgments of other bureaucrats, and fired only under extreme provocation. How then is their work to be controlled by ordinary people? How can we reconcile the growth of decision making in powerful government bureaucracies with our ideas of democracy and popular control?
Stakeholders are those groups or individual in society that have a direct interest in the performance and activities of business. The main stakeholders are employees, shareholders, customers, suppliers, financiers and the local community. Stakeholders may not hold any formal authority over the organization, but theorists such as Professor Charles Handy believe that a firm’s best long-term interests are served by paying close attention to the needs of each of these stakeholders. The modern view is that a firm has responsibilities to all its stakeholders i.e. everyone with a legitimate interest in the company. These include shareholders, competitors, government, employees, directors, distributors, customers, sub-contractors, pressure groups and local community. Although a company’s directors owes a legal duty to the shareholders, they also have moral responsibilities to other stakeholder group’s objectives in their entirely. As a firm can’t meet all stakeholders’ objectives in their entirety, they have to compromise. A company should try to serve the needs of these groups or individuals, but whilst some needs are common, other needs conflict. By the development of this second runway, the public and stakeholders are affected in one or other way and it can be positive and negative.
Frank J. Goodnow’s “Politics and Administration,” infers that politics and administration cannot be divided and are in need of each other to function. However, politics are superior to administration. Goodnow’s further analyzes and identifies three forms of authorities that enforce and implements states will. The first responsibility of authority is to respect the right of the people when conflicts ascend between either private or public matters. The second is judicial authorities also referred to as executive authorities that ensure the needs and policies of the state are executed. The third authority also referred to as “administrative authorities,” focuses on the mechanical, scientific and business authorities pertaining to the government.
Corporate Governance has over the past two decades become a pertinent subject in the corporate world owing to the control that rests in the hands of owners/shareholder, directors and senior officers of a corporation in the financial decisions of the said corporation.
Though the idea of Governance is not new and is as old as human civilization, recently, the term Governance is widely used; yet, with various definitions to the term. In a basic send, Governance is defined as city, a company, etc. is controlled by the people who run it (Merriam-Webster Dictionary, 2015). Governance can also be identified to describe a process of policy formulation in which state actors share power with private actors (Rhodes, 1997). Renate Mayntz defined governance as the system of rules that shapes the actions of social actors (Mayntz, 2004), but in a general sense, Governance means the capacity of government, functioning with or without the private sector, to steer an economy or society towards a collective goal.
Corporate Governance has over the past twenty years become an important subject in the world of finance owing to the control that rests in the hands of owners/shareholder, directors and senior officers of a corporation in the financial decisions of the said corporation.
Empirical evidences show that good corporate governance promotes effective monitoring of corporate assets; effective risk management and greater transparency. It also helps to achieve and maintain public trust and confidence in how companies are run. I.e. it is a means to keeping companies profitable. A study by Epstein et al., (2012) highlighted that from either an internal long-term profitability or external shareholder perspective, there is an indication that good board governance add value to an organisation. In contrast, poor corporate governance may contribute to company /business failure, which could, in turn, causes a company into liquidity crisis leading them to insolvency or total collapse.
...ion “Who governs?” leads quite naturally to two others: “Can one steer contemporary polities?” and “How can such steering be conciliated with the constraints of democracy?” Only in-depth research into the workings of contemporary public administrations can provide solid answers to these questions. Throughout the rest of this encyclopedia, definitions and interpretations of how governance fits, or fails to fit, with public administration provide valuable signposts with which to encourage social scientists to aim their empirical investigations in this direction.
This chapter of the research is dedicated to presenting the review of the related literature, which will be helpful in establishing conceptual and theoretical-framework pertinent to the study. Thus, this portion of the research will bring out the meaning of good governance by summarizing what has been said by different scholars’, international organizations as well as aid agencies. The attributes/elements of good governance which were defined by UNDP and AfDB will be presented separately. In line with this, the major dimensions of good governance, elements of good urban governance with their detail will be summarized which will be helpful in analyzing good governance at local level.