Unit IV Corporate Governance- concepts ,issues &; Theories of corporate governance: property rights and social institution Theories, contractual...

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Operations Management

Unit IV
Corporate Governance- concepts ,issues &; Theories of corporategovernance: property rights
and social institution Theories, contractual theory, stakeholdertheoryneed of corporate
governance code, Code of Corporate Practices, Social Responsibilityof Corporates, Corporate
Social Reporting.
NOTES FOR CORPORATE GOVERNANCE

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Corporate GovernanceCorporate governance is that the system of rules practices andprocesses by that a firm is directed and controlled companygovernance basically involves equalization of the interests of acompanys several stakeholders like shareholders seniormanagement executives customers suppliers financiers the govtand so the community Since company governance additionallyprovides the framework for attaining a companys objectives itencompasses much each sphere of management from action plans andinternal controls to performance measuring and companyrevelationAn example of wonderful company governance is also a welldefinedand implemented a structure that works for the advantage ofeverybody involved by guaranteeing that the enterprise adheres toaccepted moral standards best practices and formal laws or elsedangerous company governance is seen as poorlystructuredambiguous and noncompliant which might injury the image ormonetary health of a businessConcepts of company Governance1 FairnessThe board of administrators ought to treat all stakeholders fairlyand equitably2 IndependenceEach director ought to freelance There ought to be no conflict ofinterest for instance it might not be sensible for a director tourge concerned within the sale of Associate in Nursing quality to adifferent company if heshe was a director of that alternativecompany too3 HonestyThe directors should defend the shareholders interests within theorganization and may offer confidence to the shareholders thattheir interests area unit being protected4 TransparencyThe directors ought to disclose material data in a very timely andcorrect manner5 responsiblenessThose who manage the business ie directors ought to beresponsible to people who own the business ieshareholders6 IntegrityMoral and moral problems ought to be thought of once creatingchoices relevant to the organization7 ResponsibilityThe board of administrators ought to make sure the organizationcomplies with the relevant laws wherever it operatesTheories of company GovernanceAgency TheoryAgency theory defines the affiliation between the principals suchas shareholders of the company and agents such as administratorsof the company inline with this theory the principals of thecompany rent the agents to perform work The principals delegatethe work of running the business to the directors or managersWorld Health Organization area unit agents of shareholders Theshareholders expect the agents to act and build choices inside thesimplest interest of the principal On the contrary it is notnecessary that the agent builds choices inside the simplestinterests of the principals The agent might even succumb toselfinterest timeserving behavior and are available in need ofexpectations of the principal The key feature of agency theory See Answer

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