Corporate GovernanceIntroductionCorporate governance is a group of customs, laws, policies, and institutions guiding the management or administration of a corporation or company. It can also be defined as the bond between the stakeholders of an organization and the objectives they aim to achieve as a group. Corporate governance is necessary as it ensures the accountability of the personnel in an organization by use of mechanisms that try to lessen the principal-agent problem. A good corporate governance is a tool for social economic development that is it offers a good relationship between the shareholders and ensures that the economic status of every member is strengthened.
There are many other definitions of corporate governance based on the field of specialization; those in other fields like sociology, psychology, or law look at it from their own perspectives. A corporate governance represents a corporation and can sign in its name, thus it should be well structured with the executives who are good role model and having perfect characters which enables them achieve the goals of the corporation. These executives have the roles of organizing the others and guiding in the meeting proceedings.
Thus they should be wise with good leadership qualities. The board structures and characteristics that contribute to effective corporate governanceThe board of directors is the main body of which governs a corporation, however its structure and distinctiveness has much impacts on the performance of the firm. As the owner of the corporation one should be careful when selecting the board of directors; this will decide whether you succeed or not. The board should be well structured with the members from different backgrounds so as to have divergent point of views when it comes to the issue problem solving or decision making (MacLeod 22). There are many characteristics that should be put in place when choosing the board members.
The board should include wealth people as it is said birds of the same feathers flock together so it is to human beings; people of the same social class spends time together. This will be to the advantage of the corporation if need arise it will easily get support from the shareholders. The board members should have a good relationship with the society or have a rapport with the world. The board members should have passion to work.
They should love and enjoy their work so as to easily achieve their objectives. It is important to have a can do attitude which will encourage them to work more hard and develop a positive attitude towards their work even as they face challenges they can easily find a way to overcome them. For it to be possible and easy to determine board members with these characters the owner should first have them (Crowther 23). The characters will help the governors offer an effective leadership as they will be great role models to the people working with them and built a good rapport hence a favorable working environment. Voluntary codes are a set of none legislatively commitments which are agreed upon by one person or a group or corporations.
They may also be set to influence, shape, manage, or standardize behavior.