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Effectiveness Corporate Governance

Autor:   •  April 9, 2011  •  Essay  •  270 Words (2 Pages)  •  1,413 Views

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Effectiveness corporate governance is an important step in building market confidence and doing long-term international investment activities (Corporate governance and firm performance pdf 2007).This paper sets out to discuss that if the way which corporations pay to the members of the board of directors is the most important factor affecting the effectiveness of corporate governance. I will explain what corporate governance is and identify the factors that influence the effectiveness of corporate governance.

In the corporate governance structure, the corporation's board of directors is a central power. (What is the meaning of corporate governance? 2010) It determines the management rights and governance rights to reduce potential ‘agency' risks of the management. (Measuring the effectiveness of corporate governance 2010) The duties of board members are to represent the equality of the owners and make important decisions. And they always ensure that the corporation is being run and review operations and income. (Board of directors guidelines 2010) Because of this importance, so, when a firm achieves profit, it will share the residual amount which equal to total assets minus total liabilities with the board members. Rationally, there are several ways which the corporation paid such as dividend, cash and shares and so on. The firm satisfied the equality of board members through those ways. In doing so, it can improve the work efficiency of members of the board of directors and other employees and stimulate investments. In addition, all of important decisions are made by the board members. So, in my opinion, the ways which corporate pay to the board members is the certain important factor in efficiency corporate governance.

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