Corporate Governance Coursework Example | Topics and Well Written Essays - 1500 words - 1

Corporate Governance - Coursework Example While these people are usually elected by the Board of Directors or hired based upon their past record, professional skills and business acumen- it is sad when they indulge in scandalous behavior that can lead a company to bankruptcy and closure. In recent years we have had corporate scandals involving such well known names as Enron and Worldcom in the USA and Parmalat in Italy. These widely recognized household names had a national or regional presence at least, with some even having business interests in various countries across the globe. This is what makes their demise all the more shocking. What is Corporate Governance? Broadly speaking, Corporate Governance may be defined as a set of laws, rules and principles by which a business is operated and controlled. Some of these rules are set down by law and common business practices and the culture of the land, while others are defined by the owners and those in the higher echelons of management of the enterprise. The rules of corpora te governance are based on morality and integrity and fair play. ... It provides the structure through which the objectives of the company are set, the means of attaining these and monitoring performance are determined’ (OECD, 1999, 1). This definition captures the entities of all who are involved as well as the working relationships among them with respect to the functions and responsibilities of corporate governance. The Need and Importance of Corporate Governance Quite simply, the stakeholders of a corporation-whether they be debtors, creditors, suppliers or distributors- as well as the general public would love to do business with a corporate entity or buy its products and services if they know that the management and the employees are a well reputed group and they can rely on the quality of the merchandise or service that is being provided to them. In other words the public perceives the corporate entity and its management and workers to be good and honest hardworking citizens, working hard to contribute to the good of the economy and soci ety at large. Of course they price their goods to include profit as well as to cover the costs and expenses of running a business. But the exposure of bad and fraudulent business practices as well as dubious business activities will certainly make people think twice about the company and its bonafides- which have now fallen into disrepute It can be an audit team or the actions of a concerned whistleblower that exposes these activities2 (Wearing, 2005, 27). Once the beans have been spilled, the company usually comes under the investigation of the Securities and Exchange Commission and other Federal agencies such as FBI and law enforcement can also get involved. In the UK this would involve actions and investigations by the Home Department and the Metropolitan Police. Once the