Corporate Governance : An Organization Essay

Corporate Governance : An Organization Essay

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Corporate governance is mainly about how an organization should be managed or governed. It hold more relevance in case of companies which have grown using equity capital taken from investors. Public company stocks using investor equity capital brings them under closer regulatory scrutiny. All affairs pertaining to an organization where the shareholders/stakeholders interests are foremost, should be managed per the relevant regulatory framework. Free flow of information amongst the shareholders is critical as they can measure the performance, growth and strategies of the organization. Since people have invested their money on the company, it is important for them to be aware of company’s performance, hence the right to choose the management committee to oversee the company. Corporate governance policy for each country is based on its political, social, and economical philosophies. In USA, where capitalism is the core philosophy, where increasing wealth of shareholders alone is of foremost importance and the market forces will pick the winner. However, in countries like Japan and Germany, where the banks have a major financial stake in most of the organization through collaterals for credit, strategic decision taken by the banks would steer the organizations. Failures of several organizations due to massive fraudulent activities help other countries to learn from the grave mistakes. It is important to understand the subtle differences between the corporate governance models in US and Europe.
US corporate governance is based on shareholder wealth maximization principles. Regulatory governing bodies include the Sarbanes-Oxley Act or 2002 (SOX), SEC, and guidelines of the stock exchanges like NASDAQ, etc. Also, court judgements from d...


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...ivatization process was the usage of the tender method which resulted in the large scales to foreign investors. The Estonian Privatization Agency, created in 1993 found out that 70% of the sale of companies privatized went to foreign owners.
Estonia Board Structure:
Much like Europe, Estonia has a two-tier board structure comprising of a supervisory and management board. The role of supervisory board is to plan activities, organize management and supervise activities of the management board whereas the management board’s role is to direct the company which is the executive body as well. Management board must follow the instructions of the supervisory board and get its approval for scope beyond certain economic transactions including the approval for selection of the management board members. Management board members cannot be part of supervisory board and vice-versa.

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