The paper "Whether Institutional Investors Play any Role in the Corporate Governance of Organizations" is a perfect example of business coursework. This essay is trying to assess whether institutional investors play any role in the corporate governance of organizations. Discussions concerning the role of the investors in corporate governance have been done while considering the different corporate governance systems that include Anglo-American corporate governance model and European corporate governance model. The characteristics of the European corporate governance and Anglo-American corporate governance model are explored to make corporate governance understood better at the international level.
Corporate governance practices and theories have been explained aiming at shading more light concerning how organizational practices that have been evolving to accommodate the changes in the corporate model in the recent business management practices. The recent business, government, organizational and industry examples of corporate governance practices are explored in the process of assessing the role played by investors in corporate governance of organizations. Lastly, recommendations are provided concerning how organizations can improve corporate governance practices. Introduction Cooperate Governance refers to the rules, processes and the practices which are used to direct and control the operations of a company.
Corporate governance exists in situations where managers are given the responsibilities of managing funds of investors (Berle, 2012). The investors expected the managers to manage their funds according to their interests but not their interests where the managers are expected to work towards maximizing the wealth of the investors. The implementation of corporate governance is geared towards ensuring that there is proper management of the funds that are invested. The financiers of business do ensure that corporate governance is properly implemented to ensure that they monitor the managerial practices of the management and ensure that the management is accountable in the way they make investment decisions (Warnock, 2006).
The managers of a company are responsible for ensuring that they take strategies that are necessary for the process of ensuring that the businesses they manage are successful. Corporate governance tries to separate the ownership and management of the organizations where the standards and the rules in the management of the invested funds are stipulated. Therefore, the managers then act as the agents while the investors as the principal where the investors have vested the responsibility of managing the fund on the hand of managers to ensure that their funds are managed in a way that can guarantee wealth maximizations. The modern business models do allow rapid development of corporate governance models leading to differing models in corporate governance.
The differences can be associated with the changes that have been taking place in the managing of organizations with increased engagement of the stakeholders (Bush, 2005). The implementation process of the new models of corporate governance does change from one region to the other due to the changes concerning nature and functioning of business in the different regions.
As a result, there has been a trend that has been taking place in corporate governance due to the many transformations that have been taking place in the management of the organization. For instance, the trends in the corporate governance can be associated with the changes in the roles of the board of directors who have been given the responsibility to ensure proper monitoring with the management of the investors’ funds.
The board of directors is expected by shareholders to ensure that the managerial practices of the managers are designed to ensure that their wealth is maximized (Jensen, 2009). As a result, the trends in corporate governance is making the board of directors more responsible for ensuring that the managers are responsible in the way they manage the invested funds.
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