why companies need corporate governance in our initiative to provide Best Assignment Help Australia services.
Walton & Whitener describes that through the corporate governance financial transparency can be facilitated that would be effective to foster the investor’s confidence and will enable the companies to access more capital at lower cost. The good corporate governance practices can also be seen as the mean of improving performance and stability of the organizations. In the current business environment, it is essential for the businesses to access resources for funding both domestically and at foreign level for economic and social progress that can only be bought through the good corporate governance practices. The sound corporate governance not only helps to attract long term foreign investment but also attract local investors at both individual and institutional level. It is because; unlike the international investors, domestic investors face a higher amount of risk due to lack of diversity.
The research on 11 companies in MENA region that implemented good corporate governance standards shows an increase in transparency and fairness to information disclosure of those companies. To implement the corporate governance, each company made board level improvements. The change in the board level was related to the structure, composition, roles, and business practices etc. The composition and structure of board was differed from company to company. The main improvements that are made at the board level were, increase in the stewardship of the board, change in the roles of board members & to strengthen their posture towards management, an increase in the procedure to enhance the effectiveness & efficiency of the board members, and to perform the depth analysis through the board members (Corporate Governance Success Stories 2010). These improvements caused an effective implantation of corporate governance to achieve desired competitiveness and objectives in the international market.
The management control is also a crucial part of the good corporate governance that includes wide area of functions such as internal control, internal & external audit, risk management, human resources, information technology, and financial management. The changes in these functions are different for different companies. Some other areas such as disclosure, transparency, family governance and shareholder relations are also included in the improvement process. The change in management control and board level caused an increase in the ability of the business to access financial resources to fund its capital expansion. The change in the governance structure of the companies increased the market confidence and the assurance for the investors and other creditors. It also reduced the cost of capital by changing the debts terms and rates in a better way. At the same time, it also caused an increase in the company valuation by the investors as implementation of corporate governance caused an increase in fairness and transparency in the accounting information.