Corporate Governance Research Paper Example | Topics and Well Written Essays - 1000 words

Corporate Governance - Research Paper Example The present study would focus on corporate governance as the way in which companies are controlled and governed. It also entails relationships among stakeholders with the same goals to benefit the welfare. Corporate governance has several good components that ensure proper governance. To begin with, directors and senior officers take up the task of implementing new requirements that have been imposed by the Sarbanes- Oxley Act and associated SEC and stock market regulations. They need to stay in focus with the broader and strategic objectives of corporate governance. Businesses will grow stronger if they comply with legal and regulatory requirements. They should also maintain high profile risk management. The boards of directors are primarily responsible for ensuring there is effective governance. They not only have to ensure that sound systems of governance are in place, but also that such systems work effectively through evaluation of performance and thorough monitoring. On the sid e of legal and regulatory reforms, a lot of attention has been particularly, focused on boards and their performance especially when it comes to the independence of the board management. There also has to be a lot of scrutiny on the side of directors, they should be watched more closely to ensure there is a high level of transparency. Good corporate governance in a business will always translate to good financial performance. Profitable investment opportunities and increased reliance on external financing are attributes exhibited by firms with strong corporate governance, according to the University of Michigan Business School. Also, it is true that companies with high governance standards will always receive the best premium from investors. Good corporate governance defines the business strategy of a business, enhancing competitive positions. A company can therefore recruit and retain productive employees if it possesses a stable base of corporate governance (Julien & Rieger 8) Enr on failed greatly in corporate governance. From violating the recommendations by government reformers where Ken Lay served as CEO and chairman of the board, to having significant shares of Enron being owned by board members, and also the board members earning money working on Enron’s projects. Enron also suffered complicated accounting and finance transactions needed approval by an external auditor and lawyers even before getting to the board members. There was a major problem with Enron’s code of ethics, as senior stakeholders were prohibited from having any financial stake in organizations dealing with Enron. Corporate Governance has played a major role in the auditor’s evaluation of a company’s financial systems and internal control systems. Corporate governance ensure that that board members act transparently and maintain accountability in their actions, this greatly assists the auditors in ensuring that there is no fraud committed by the board member s thus reducing the overall task of auditing. Corporate governance also ensures that the senior members of the companies including the directors and managers are scrutinized, and thoroughly