Corporate governance is growing as one of the more important aspects of business conduct and development.
The concept helps explain proper business management and governance practices and offers recommendations on the best path towards success within any company’s business culture.
If we are going to get a handle on stopping misconduct, we need to look more closely at what creates the environment that encourages bad behavior in the first place.
Boards ought to think hard about whether the culture practiced within the company is the same as that which they espouse, particularly under pressure.
Good corporate governance makes bribes harder to give and harder to conceal, and it also contributes to the broader climate of transparency and fair dealing.
Weak corporate governance, for example, has been linked to the inability of countries to attract investment, financial collapses, persistent corruption, and failures of privatization, weak property rights, and many other development challenges countries around the world face.
Bad corporate governance causes loss of ethics which results in loss of reputation. Lack of internal trust leads to weak compliance, the bending and eventual breaking and flouting of rules, misuse of company assets, abuse of company powers, victimization of well-meaning people, loss of strategic direction and loss of capable leaders.
This normally leads to external mistrust, loss of business, loss of funding support, loss of profit, runs on the company, and eventually total collapse.
Corporate governance can be seen as an anti-corruption tool. Companies should be aware that more government involvement in the economy often means more opportunities for corruption.
Impacts of corporate governance include bringing stability to markets through strengthening competitiveness (companies and economies) and institutions.
It improves risk mitigation, promotes investment, lowers cost of capital and it also weakens corruption whilst strengthening lending.
Corporate governance also promotes reform of state owned enterprises and also successful privatization and the same time building transparent relationships between businesses and the state.
Also corporate governance has been used as a tool to combat poverty.
However, we cannot say that Africa has totally failed in the mission of good governance but it is trying to achieve progress and development
Companies are beginning to look at corporate governance as something that can give them a competitive edge.
The challenge remains, however, in channeling this increased attention into reforms that actually improve governance practices
Good corporate governance standards are now established and well-recognized as an ideal to which companies aspire.
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