Importance Of Corporate Governance

Part A
The recent corporate collapses have given rise to the major contemporary issues in corporate governance which fuelled from the roles and responsibilities of board and directors. Corporate governance is not just mean of compilation of norms and procedures but the ways company conduct business for whom this norms and procedures is for? You cannot have good corporate governance unless you have poor practises in terms of dealings in business. Corporate governance is about how you ingrain your values and principles into every aspect of doing business.
The ASX Corporate Government council (2003, p.3) guidelines on “Principle of Good Corporate Governance and Best Practices Recommendations”, define corporate governance as “The system by which the companies are directed and managed. It influences how the objectives of the company are set and achieved, how risk is monitored and assessed, and how performance is optimized’.
The companies have given importance to adding the independent directors with diverse profile on their board. The role of the board and directors has come in scrutiny in recent times due to the major corporate collapses such as HIH (Australia), Enron, Worldcom, Parmalat. Traditionally, Directors were responsible for increasing shareholder wealth. However, this is now expected as director’s responsibilities to include other stakeholders, social and environmental issues in consider while making their decisions. The findings indicate that it is now more challenging to be a director for the reason that of the increase level of workforce from the legal and regulatory requirements. This has also compressed on director and board evaluations.
The other major concern is that directors’ personal experiences did not necessar...

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... is between them. It is difficult to strictly follow corporate government regimes as purely mandatory or purely voluntary since most of the regimes show characteristics features of both therefore we can say corporate governance should fall in between.
The voluntary systems incorporations self-regulation may implement in some areas which may be unlikely to achieve the desired of compliance. Due to the corporate collapses in the world recognized that self-regulation is not enough but statutory regulations are required.
Similarly, Enron and the HIH Royal Commision and Enron disclosed the inefficiency of voluntary self-regulation system not to mention the regulatory failures. To avoide the future failures in Australia it is crucial to have mandatine new corporate governace which should give rise to “Hybrid System” of corporate governance regulation. (Zadkovich, 2007)