CORPORATE GOVERNANCE AND FINANCIAL REGULATION

Corporate Governance and Financial Regulation



Corporate Governance and Financial Regulation

Corporate Governance

When it comes to defining the concept of corporate governance, there is no universally accepted definition of the said phenomenon. The definition of corporate governance varies from one country to another. This is primarily because each country is different from the other in terms of their culture, historical development as well legal system. The definition of corporate governance is determined in terms of the ways in which a firm's finance suppliers make sure they would get a good Return on Investment (ROI).

This definition is deficient because it lays emphasis on financial supply but does not distinguish the relationship that exists between the firm and the legion of stakeholders, who have varying interests and they have to be taken care of. For this reason, corporate governance has also represented as a collective grouping of individuals, who have been unified into a body with authority and power to control things, give directions, and rule and organization (Ayres 1992, p.90).

In essence, corporate governance provides a new approach to decision-making process, giving full scope for cooperation between stakeholders and the firm. Corporate governance is framed by laws and accounting rules ensuring the necessary transparency, corporate governance is theoretically a way to ensure the best interests of multiple stakeholders (Sundaramurthy 2003, p.397-415).

In this framework, corporate governance is the set of rules for shareholders to ensure that companies, which they hold shares of, are directed in accordance with their own interests. This concept is increasingly being formalized through enterprise agreements across the globe.

The great crisis and bankruptcy that began to emerge in the different systems and corporations in the recent past has aroused the need to transform the practices of corporate business, thus creating government that comes to the corporate world to try to normalize the functioning of markets, especially the markets for capital. This is since this market is where are the biggest frauds of the economy, for lack of information transparent financial, reliable and high quality (Ayres 1992, p.90).

"Corporate governance" simply means “business management", the term is usually normatively used in the sense defined here. There are a number of rules (guidelines, principles, codes) that define good corporate governance, with the target directions differ. On one hand, it comes to responsible corporate governance in the interests of owners and shareholders as well as the public. Another perspective concerns the stakeholders and other stakeholders (especially employees, including the evidence that long-term success is attainable only with the involvement of these interests, whether the most comprehensive perspective also calls for social, cultural and social responsibility (Rappaport 1986, p.45)

Thus, it corresponds to the understanding of corporate responsibility, as well as the Comprehensive Quality Management. Corporate governance is the set of principles and techniques to improve the management of commercial companies that appeal to the public's savings. It arises from the need to overcome the problems of separation between ownership and management in large publically traded companies (Yoshimori 1995, ...