Corporate Governance: management`s accountability to stakeholders

Nowadays corporate governance is seen as the key of attracting investors . Capital flow seems directed towards the companies , which practice fair and transparent ways of governing their organisations With the changing global business scenario the need of understanding and effective practise of fair and technologically advance corporate governance has also increased . In my speech I will first explain the notion of Corporate Governance

ICAEW (2002 ) has explained corporate governance in a very effective and comprehensive manner as Corporate governance is commonly referred to as a system by which organisations are

directed and controlled . It is the process by which company objectives are established , achieved and monitored . Corporate governance is concerned with the relationships and responsibilities between the board , management , shareholders and other relevant stakeholders within a legal and regulatory framework

Sir Adrian Cadbury (1992 ) defined corporate governance as `the whole system of controls , both financial and otherwise , by which a company is directed and controlled

There are no hard and fast rules for corporate governance , which can be prescribed for all the countries . These rules can be different for different countries according to their needs and cultural settings According to ICAEW (2002 ) with all the contrasts present in the rules and regulations of different countries emphasis is given to generic corporate governance principles of responsibility , accountability transparency and fairness

Responsibility of directors who approve the strategic direction of the organisation within a framework of prudent controls and who employ monitor and reward management

Accountability of the board to shareholders who have the right to receive information on the financial stewardship of their investment and exercise power to reward or remove the directors entrusted to run the company

Transparency of clear information with which meaningful analysis of a company and its actions can be made . The disclosure of financial and operational information and internal processes of management oversight and control enable outsiders to understand the organisation

Fairness that all shareholders are treated equally and have the opportunity for redress for violation of their rights . According to Meigs et al (1999 ) this information meets the needs of users of the information-investors . Creditors , managers , and so on-and support many kinds of financial decision performance evaluation and capital allocation , among others (P .07

Corporations resolutely focus on maximising profits and a `legal obligation to act in the best interests of their shareholders . By and large , this excludes acting ethically or socially responsibly (Slapper and Tombs , 1999 (Shah , 2002 ) states that some Trans-national corporations make more in sales than the GDPs (Gross Domestic Product ) of many countries . In fact of the 100 hundred wealthiest bodies , 51 percent are owned by corporations . While this can be seen as a success story from some viewpoints , others suggest that these and other large corporations are largely unaccountable for the many social and environmental problems that they leave in their wake , and that their size means that their effects are considerable

It is not that every single corporation is inherently bad or greedy , but commonly , the very large...