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Corporate Governance Framework and Financial Performance Essay

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Updated: May 27th, 2021

Corporate governance is important as it aims to increase the company’s accountability and prevent major failures. The study by Azeez (2015) shows that there is a direct link between corporate governance and organizational performance. Effective corporate governance may be performed through regular meetings of organizations’ authorities, a clear division of their tasks and responsibilities, and the development of the risk management system.

Corporate governance may be defined as a system of principles and processes that control and direct the operations of organizations (“2018 Corporate governance framework,” 2018). Performance and accountability are two primary factors associated with effective governance (“Corporate governance framework,” n.d.). Performance is related to the utilization of governance arrangements to improve outcomes. Accountability is crucial as it ensures that legislative requirements are met, and confidence in organizations’ decisions is achieved. There are six principles of the corporate governance framework (“Corporate governance framework,” n.d.).

The main ones include transparency, accountability, and security. These three components provide the mechanisms for ensuring that companies follow the necessary standards, establish clear responsibilities and procedures within their systems, as well as implement supervision and control methods. The other principles are integrity, efficiency, and leadership. They prove that organizations act ethically and impartially, use their resources effectively, and achieve high levels of staff commitment. Corporate governance can also improve the public image of companies and provide a structure for their business models.

Corporate governance is a vital tool organization can use to improve their management techniques and guarantee the growth of their companies. It is based on a framework that ensures fairness, accountability, and transparency of relationships and operations. The presented discussion suggests that firms should aim to establish corporate governance systems to increase the quality of their performance and services, as well as improve their public representation.

References

. (2018). Web.

Azeez, A. A. (2015). Corporate governance and firm performance: Evidence from Sri Lanka. Journal of Finance, 3(1), 180-189.

Corporate governance framework. (n.d.). Web.

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1. IvyPanda. "Corporate Governance Framework and Financial Performance." May 27, 2021. https://ivypanda.com/essays/corporate-governance-framework-and-financial-performance/.


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IvyPanda. "Corporate Governance Framework and Financial Performance." May 27, 2021. https://ivypanda.com/essays/corporate-governance-framework-and-financial-performance/.

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IvyPanda. 2021. "Corporate Governance Framework and Financial Performance." May 27, 2021. https://ivypanda.com/essays/corporate-governance-framework-and-financial-performance/.

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IvyPanda. (2021) 'Corporate Governance Framework and Financial Performance'. 27 May.

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