Corporate Governance Degree Essay Example | Topics and Well Written Essays - 2000 words

Corporate Governance Degree - Essay Example Corporate governance is the collection of laws, rules and ways that regulate the interactions and relationships between the owners i.e. capital providers, the governing body i.e. the board or boards in the two-tier system), senior managers and other people that take part in the decision making process and are affected by the dispositions and business activities of the company. Corporate governance exists in its own space. It shows the economic, historical, cultural and legal characteristics of a nation along with its business history and corporate sector. It is shaped by the ownership structures, ways of that particular economy and the available financing options. It includes the role of the financial markets, the banking and insurance sectors and the government in the form of shareholders and capital providers in some nations. "Corporate governance deals with the ways in which suppliers of finance to corporations assure themselves of getting a return on their investment", says Andrei Shleifer and Robert W. Vishny. The system of corporate governanc... hich may occur because different board structures are associated with different arrangements for establishing executive pay (Schwalbach, Joachim, Conyon, Martin J., 2000). Variations present in these areas shows some of the considerable differences among all the governance models. Corporate governance has inevitable relationship with the ownership, control structures and patterns prevalent in an economy, adds Miguel A. Mendez. Eventuating ownership and explaining the agency factor i.e. the owners of the firm hire managers in order to control and manage the assets of the firm is an internal feature of the firm and central to every corporate governance model. "Britain and the US are viewed as similar enough to contrast with Japan and Germany, the benefits of external shareholding, capital markets and the profit-motive competing with committed investors, insider control and the mixed objectives of several stakeholders", says Robert Fitzgerald and Etsuo Abe (Fitzgerald and Abe, 2004). The role of Openness and Efficiency The space of the board i.e. its freedom to execute a judgment in the motive of the benefit of all shareholders and can be defined on behalf of all stakeholders is both inevitable as well as crucial. The freedom of the governing body depends on the way it is organized including the factors like who are the chairman of the board and the top-most leadership positions of other crucial genre like chairmanship of nomination and audit committees, vice-chairmanship, and managing directorship. It also depends upon the composition