Corporate Governance

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Strategic Finance

Reflective Paper: Corporate Governance

Siddharth Menon
13200701

What is Corporate Governance?
Corporate Governance defines the methods, structure and the processes of a company in which the business and affairs of the company managed and directed (Khan, 2011). It deals with ways in which suppliers of finance to corporations assure themselves of getting a return on their investment. Corporate Governance can also be defined as the whole system of rights, processes and control established internally and externally over the management of a business entity with the object of protecting the interests of all stakeholders.
1.1 Introduction
Corporate Governance is the term that describes the processes, policies, laws and institutions that direct the companies in the way they control their functioning. Its purpose is to attain the main goal of the organization and managing relationships between the board of directors and shareholders, which is basically between the management and the stakeholders. It concentrates on reducing the principal-agent problem in the organization. Good corporate finance is essential in ensuring that companies maintain a strong position in the market especially when they are competitive and deserve an efficient investment environment. Over the years, corporate governance has come to be the focus of study for a lot of financial scholars. One of the core agency problems faced by firms is the separation of ownership from control. This consequently leads to issues pertaining to maintaining an efficient control over the assets of the organization in the best interests of all company stakeholders. In particular, a lot of research work has been put into agency related problems. Companies with not a very good framework of corporate governance tend to face more agency problems than others. This agency problem permits the management to benefit privately at the cost of the firm’s performance. A good balance between



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