Question

Corporate goverance provides us with the processing framework of how a particular company is directed and controlled. “A growing stream of studies are examining corporate governance in relationship to external environmental processes, including changes in regulations, shifting stakeholder pressures, and emerging social policies” (Tihanyi, Graffin, & George, 2015, p.4). Please focus on two specific examples where the external environment impacted corporate governance of the company of your choice.

According to Lars Kolind (2013), corporate governance is much more than meeting official guidelines; it is the essence of leadership. State your level of agreement or disagreement with this statement and provide a thorough justification.
Identify all stakeholders under the umbrella of corporate governance and explain how each stakeholder is impacted by this concept in particular.

Answer 1

1) In India and other developing countries, there is evidence that growth and development of the economy have a positive effect on rules and laws that promote corporate governance practice. This finding implies that when there is an improvement in growth and development in a nation through sound economic policy, there is the need for stringent rules and laws that enhance corporate governance so that investors will have the confidence to invest in firms.

2) Similarly,  foreign investments influence rules and laws guide corporate governance system with a positive significant coefficient

This shows that how the external factors affect corporate governance and above are the two examples.

All stakeholders are listed below,

Legislator

Directors (Exec and Non-Exec)

Regulators

Academician

Company Executives and employee

Individual investor

Institutional investor

Accountant/Auditor

and Customers

Corporate governance mainly deals with balancing the interests of the many stakeholders in a business— these include its shareholders, management, customers, suppliers, financiers, government and the community.

Leadership and corporate governance go together, and neither lives in a vacuum. The world we want to live is where everyone leads with integrity and encompasses corporate governance for the common good. Corporate governance inquiries the role of leadership in creating fairness and transparency in the use and management of resources, impact of business operations on the conditions and corporate social responsibility. It tests the integrity of those who are entrusted to be the custodians or agents of national and company resources. In short, leadership means good stewardship of shareholder’s assets and the resources to assure that today’s business operations are sustainable beyond the current age. Leadership speaks about the responsible business plan which includes the 3Ps; people, planet, and profits. However, there is a clear demarcation of responsibilities between the different levels of leadership.

The role of the board and directors of any enterprise is the link between shareholders and the company. An active board should lead and control the company in partnership with its managing director, CEO and the senior management team. Building a useful and high-performance board is not an easy task, but it is highly possible and desirable. An active board must develop a methodology to ensure that the board has the correct structure, composition, size, culture, gender balance and skills set as well as providing that the board is not only practical but also consistent in its performance and sustainability regarding succession planning. A dysfunctional board is one who chooses to ignore these critical parts of good governance. For instance, non-executive board people are required to be trained on corporate governance best exercises, director excellence, to act in good hope, to exercise their duties regarding business judgment rule and must not have material personal interest.