Why corporate governance is necessary for business growth explain?
Answers
Corporate governance is very important for business growth . This is because of following reasons:
1. Corporate governance is introduced to increase the accountability of company or business establishment and to avoid massive disasters or fruads before they occur.
2. Better corporate governance ensures corporate success and better economic growth.
3. Strong corporate governance maintains confidence of investors which helps the company to raise capital efficiently and effectively.
4. It lowers the capital cost.
5. There is a positive impact on the share price.
The method of corporate governance is adopted to control and direct a company. In any company, it is the senior management, stakeholders or the board of directors who are responsible for setting the objectives and values for their companies. Good governance increases its brand image and is effective in attracting investors to invest in companies.
Explanation:
- The companies that are well-governed do well in the markets and attract customers and investors.
- Good governance should follow the need of being transparent, efficient, effective, responsive and should be accountable.
- Effective corporate governance is necessary because of controlling the chances of conflict of interest amongst the senior management or the stakeholders.
- It helps in defining the responsibilities and identifies the distribution rights among different people in the corporation.
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