112 Effective corporate governance includes the establishmen

1.12 Effective corporate governance includes the establishment of a well defined set of policies related to ethical behavior and ensuring that required and appropriate internal controls are in place and effective. Discuss the purpose of establishing and implementing both of these sets of policies in terms of risk and responsibility.

Solution

the general meaning of corporate governance is operate the business activities of a corporate ethically in acceptable way to all the impacted people to the business, like management, employees, customers, creditors, competitors and even government and society. protection of the rights of all stakeholders to the firm- is the objective of a good corporate governance strategy. in brief corporate governance is focus and covers the legal compliance aspects, ethical and moral values, and self made policies which are not harm to any one by knowingly or unknowingly.

the need of corporate governance is to create, promote and expose a corporate culture of transparency in the activities, accountability to their actions and disclosure of facts to all. these policies reflect how they are considering the priorities and objectives of all stakeholders to the firm. it helps to promote the equality by the business firm. even though there are set of rules, policies and regulations prepared by each firm for their functioning, some times they may be violated. some corporate bodies may not follow what they listed and prescribed, but to the externals they said that.

to overcome this, there must be a committee or inspecting and monitoring authority to observe the actions of the corporate. the people will study the policies of the entity, the impact of those policies, how the people were effected with the policies, how these policies were introduced and ultimately what is the result with the policies.

it helps the firm to revise their policies in the times of difficulties and in good times they can promote the same to business world. there are some bodies which studies the policies of firms and encouraging them by offering winner for the year for its good corporate governance and excellence.