Corporate governance Essay Example | Topics and Well Written Essays - 1250 words

Corporate governance - Essay ExampleThe fiber of independent directors and non decision maker directors become profound as they are intended to serve as deterrent in the misuse and abuse of top executive by the vested interests, especially the senior management of the company. The paper would be broadly rationalizing the role of independent non executive directors within the broader parameter of corporate governance. Corporate governance is based on publicly acceptable set and code of behaviour for the higher echelons of corporate bodies (Haller & Shore, 2005). It can primarily be described as a set of well defined policies, rules and regulations and customs that effectively control the various internal and external processes of the avocation enterprises. They are, thus intended to create an environment that improves productivity, economic efficiency and protects the interests of various stakeholders through ethically delivered goals (Solomon, 2007 Mueller, 1996). Since the s teady-going corporate governance is dependent on effective policies and laws, the role of CEO and board of directors becomes crucial agent for their efficient implementation. In the various modalities and process that are incorporated within good corporate governance, the role of independent non executive directors in the companys board has increasingly become key chemical element of the success of the company. The recent cases of abuse of shareholders rights in the various countries have brought the role of corporate governance into the prominence. The change magnitude risks to the interests of the various stakeholders have necessitated stringent code of conduct for the higher hierarchy of management. Chief Executive of the steadfast and board of directors, therefore become intrinsic part of corporate governance. They are endowed with the primarily function for good codes of corporate governance and best practices within the organization that promote accountability. Boritz, (19 90) has defined risks as thinkable loss due to uncertainty and exposure of the firm from inappropriate investment decision or a commitment. Thus, risks and need for more effective transparency within the system become vital postulates of CG whose implementation is overseen and point under the strict vigilance of independent non executive directors. Independent non executive directors in the board rear the firm with independent, objective and creative inputs on the various processes and modalities of business operations. As they are basically from outdoors the organization, they are observed to be equipped with unbiased approach to the issues and factors that could have long lasting refer on the performance outcome of the company. Cadbury report (1992, p33) explicitly states that they bring in independent judgment within the board. Their presence on board therefore is designed to discourage the vested interests against financial malpractices and fraud. This is one of the most c ardinal criteria that reiterated the importance of inclusion of independent non executive directors on the boards of the companies. UK has been a leader in setting up a Combined Code of Corporate Governance. UK boasts of a highly developed business environment with a vast shareholders base. The various financial institutions, big corporate houses, institutional investors and individuals with