Importance of Corporate Governance

Corporate governance is the system by which companies are directed and controlled. Boards of directors are responsible for the governance of their companies. The shareholders' role in governance is to appoint the directors and the auditors and to satisfy themselves that an appropriate governance structure is in place. 

Corporate governance is important because it creates a system of rules and practices that determine how a company operates and how it aligns the interest of all its stakeholders. Good corporate governance leads to ethical business practices, which leads to financial viability. The basic principles of corporate governance are accountability, transparency, fairness, and responsibility. Corporate governance consists of the guiding principles that a company puts in place to direct all of its operations, from compensation to risk management to employee treatment to reporting unfair practices to its impact on the climate, and more. all of its stakeholders, allowing the company to place itself as an attractive option to investors if its A strong, transparent corporate governance leads a company to make ethical decisions that benefit financials are also healthy. Bad corporate governance leads to a breakdown of a company, often resulting in scandals and bankruptcy.