Introduction to Corporate Governance Flashcards
Explain governance
refers to a process whereby elements in society wield power, authority, and influence and enact policies and decisions concerning public life and social upliftment
Characteristics of Governance
- Participation
- Accountability
- Effectiveness & Efficacy
- Equity & Inclusiveness
- Consensus Oriented
- Responsiveness
- Transparency
- Rule of Law
Explain Participation
Participation of both men and women is key cornerstone of good governance. Participation could be either direct or through legitimate institutions or representatives. It is important to point out that representative democracy does not necessarily mean that the concern of most vulnerable in society would not be taken into consideration in decision making
Participation needs to be
informed and organized
Explain Rule of Law
Good Governance requires fair legal frameworks that are enforced impartially. It also requires full protection of human rights, particularly those minorities. Impartial enforcement of laws requires an independent judiciary and an impartial and incorruptible police force
Explain Transparency
Means that decisions taken and their enforcement are done in a manner that follows rules and regulations. It means that information is freely available and directly accessible to those who will be affected by such decisions and their enforcement. It also means that enough information is provided and that it is provided in easily understandable forms and media.
Explain Responsiveness
Good governance requires institutions and processes try to serve the needs all stakeholders within a reasonable timeframe
Explain Consensus Oriented
Good governance requires mediation of the different interests in society to reach a broad consensus on what is in the best interest of the whole community and how this can be achieved.
Explain Equity & Inclusiveness
Ensures that all its members feel that they have a stake in it and do not feel excluded from the mainstream of society. This requires all groups, but particularly the most vulnerable, have opportunities to improve or maintain their well being.
Explain Effectiveness & Efficiency
Good governance means that processes and institutions produce results that meet the needs of society while making the best use of resources at their disposal. The concept of efficiency in the context of good governance also covers the sustainable use of natural resources and the protection of the environment
Explain accountability
Accountability is a key requirement of good governance. Not only governmental institutions but also the private sector and civil society organization must be accountable to the public and to their institutional stakeholders. Who is accountable to whom varies depending on whether decisions or actions taken are internal or external to an organization or institution. In general, an organization or an institution is accountable to those who will be affected by its decisions or actions. Accountability cannot be enforced without transparency and the rule of law.
Explain Corporate Governance
Is defined as the system of rules, practices and processes by which business corporations are directed and controlled. It basically involves balancing the interest’s of a company’s many stakeholders, such as shareholders, management, customers, suppliers, financiers, government, and the community.
What is the purpose of corporate governance?
Is to facilitate effective, entrepreneurial and prudent management that can deliver long-term success of the company. In simple terms, the fundamental aim of corporate governance is to enhance shareholders value and protect the interests of other stakeholders by improving the corporate performance and accountability.
What are the objectives of corporate governance
- Fair and Equitable Treatment of Shareholders
- Self-Assessment
- Increase Shareholder’s Wealth
- Transparency and Full Disclosure
What are the basic principles of Effective corporate governance?
It is threefold:
1. Transparency and Full Disclosure
2. Accountability
3. Corporate Control
