Need For Corporate Governance: The Need For Corporate Governance

INTRODUCTION

Corporate governance is a set of system and processes to ensure that a company is managed to suit the best interests of all stakeholders. The stakeholders may be internal stakeholders (promoters, members, workmen and executives) and external stakeholders (shareholders,Customers, lenders, dealers, venders, bankers, community, government and regulators)

According to Cadbury committee on financial aspects of corporate governance, it is the system by which companies are directed and controlled. Corporate governance is a voluntary ethnical code of business of companies with total transparency, integrity and accountability of the management. It is system of making management accountable to the stakeholders for effective management of the companies, in the interests of the company and also with adequate concern for ethics and values. It is inclusive of the structures, process cultures, and systems through which the company sets out

NEED FOR CORPORATE GOVERNANCE

This subject of corporate governance has attracted so much attention due to some fundamental reasons. The pressure for good corporate governance in the financial sector arises from fundamental, long-term changes in the environment mentioned below.

• Globalization has increased the freedom, opportunities and economic power of the corporate in the financial sector.

• Domestic liberalization has, similarly, enable local corporate and companies to expand and globalize.

• Privatization of state owned enterprises puts huge assets in the hands of the new private management.

• Accessibility to technology know-how means to run corporate made many entrepreneurs jump into creation of new business