Corporate Governance Coursework Essay Example | Topics and Well Written Essays - 1750 words

Corporate Governance Coursework - Essay Example This creates a situation where, the CEOs are tasked with decision management while the board of directors charged with decision control on behalf of a public corporation’s shareholders. This means that the public shareholders do not engage directly in running the affairs of their Company. As such, effective corporate governance is necessary to ensure that those charged with running a public corporation engage in good practices (Shleifer & Robert 1997, p.743). Most public corporations tend to experience an incentive problem. Accordingly, those tasked with the management of the public corporation are not the owners (shareholders) or stakeholders who have an interest in the success of a public corporation. For example, the top managers (CEO) are a paid professional and may have their self-interests. As such, solving the problem where senior managers make decisions that are guided by personal interests and not the shareholders, require a system of checks and balances (Shleifer & R obert 1997, p.751). The governance systems in an organization may include the board of directors, whose purpose involves, for instance, hiring of the management. In addition, hiring the services of an external auditor is also necessary to check regularly on the accuracy of financial statements in an organization. Further, other constituents, for example, the media and regulators have an important role to play in terms of enhancing corporate governance in larger organizations that serves the risk bearing constituents (Harris & Ravis 2010, p.4118). Where the CEO and the board of directors work on behalf of the public shareholders, good corporate governance is critical. In this sense, the institutional systems and measures of enhancing accountability and proper ethics are necessary for efficient management of large organizations (Harris & Ravis 2010, p.4121). This paper explores