Understanding The Corporate Governance System

Understanding the corporate governance system

Introduction

The text tells us about corporate governance, it is understood that corporate governance directs organizations and corporations in the way they act, manage and control their operations, care about achieving the objective of the organization and managing the relationship between interested parties,including administration and shareholders.

Corporate governance also focuses on a problem of people’s responsibility, in order to reduce the main problem/agent in the organization.

A good corporate governance is essential to establish a good investment environment, which companies need to have a solid position in effective financial markets, so it is essential for the economy with broad commercial precedents and thus facilitate success for a good venture.

Developing

The importance of corporate governance arises in modern companies, since they have separation of administration and property control in organizations, the main problem is reflected in the problems related to management and management problems due to differential interestsof the company’s interested parties.

Next, several opinions of some characters that have given a definition of corporate governance literature are cited:

• Zingales (1998) defines corporate governance as’ property assignment, capital structure, management, incentive schemes, acquisitions, board of directors, pressure of institutional investors, product market, competition, competition in the labor market, the structureorganizational, etc.

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  , Institutions that affect the process through which income is distributed (P are distributed (P are distributed (p. 4) ‘.

• Garvey and Swan (1994) claim that ‘governance determines how the main decision makers (executives) of the company really administer these contracts (p. 139) ‘.
• Farinha (2003) argued that the main problem in the organization arises with the relationship between the director and relationships with agents. Therefore, managers focus on the short -term perspective of investment, while shareholders were left with the rapid return of cash flows. The preference for risk is also an important source of conflict.

Shareholders associated with market risk and the risk of shares while managers always care about the company’s risk because their survival depends on a firm risk. The corporate governance area with external discipline devices is missing.

Companies through effective corporate governance can implement these devices that include the composition of the Board of Directors, increase the number of shareholders, maximize internal property and by providing different financial policies and compensation packages, of all what has already been mentionedthat the size of a company gives clarity of the interests or objectives that it wants to achieve;Knowing how to invest, through studies, it can be known which are the best variableThe investigation carried out mentions the utility and/or efficiency of strengthening relationships between shareholders and their associates.

But beyond this because of empirical experiences Kowalewski talks about the importation of having clear policies that speak of dividend distribution, this theory is based on the example of having high assets which give greater profitability, since these do not have major debts, inChange those that are more indebted have yields in its lowest dividends, here is the need for a well -structured business government, with trained personnel when making some decision making, knowing specifically the market in which you wantInvest already with the birth of emerging markets can directly affect the value that the company acquires over time.

conclusion

An efficient government is a great certainty of having policies that work in the development of the company, knowing how it can optimize a policy every day, a function is the fact of generating value that increases if the value of the company is, being efficientIn commercial relations, since they are opening business lines that general value, having a functionally structure governance a company, since it delimits the functions of each one and where they can get to make decisions, finally we can conclude that a good relationshipAmong the leaders of a company optimizes the operation of this.