Answer to Question #233168 in Economics for lacchey

Question

What is corporate governance and how did it change over time? How has going public affected corporate governance?

Answer 1

Today, the future of companies is largely determined by the quality of corporate governance, which is seen as one of the most effective ways to increase the investment attractiveness of companies and, as a result, improve the investment climate in the country.

What is corporate governance?

- a system of generally binding rules governing relations in the field of companies' activities;

- or the power and administrative activities of individuals, including representatives of top management and shareholders?

 Are corporate governance and corporate governance the same?

      On the one hand, CG includes the procedures for exercising the rights of shareholders, the duties of the board of directors and the responsibility of its members for the decisions made, the level of remuneration of the company's top management, the procedure for disclosing information and the financial control system,

On the other hand, it implies the activities of state regulators and other authorized bodies and organizations aimed at regulating the specified sphere of relations, on the third, it is the activities of rating agencies, which, by assigning certain ratings, form the investor's idea of ​​the company's investment attractiveness.

     Corporate governance is the process of finding a balance between the interests of shareholders and management in particular and the interests of individual groups of individuals and the company as a whole through the implementation by market participants of a certain system of ethical and procedural standards of conduct adopted in the business community.

     The lack of a unified approach to understanding CG is explained by the dynamism of the economy. Previously, CG was linked to the voluntary observance of ethical norms and customs of business practices by issuing companies, now there is a transition to a compulsory order, the role of the state in regulating certain aspects of corporate life is strengthening and expanding.

      Effective corporate governance requires:

- awareness of the subject of corporate governance;

- determining the legal force and status of corporate governance codes;

- constant monitoring of changes in the system of corporate relations in order to timely revise the relevant standards.