Question

Although there are many different cultural and legal approaches used in corporate governance worldwide, there is a growing consensus on what constitutes good corporate governance. List and explain at least three standardized common principles of good corporate governance.

Answer 1

Even though different countries have different practices related to corporate governance the broad principles over which these policies are based are consistent. The three-common principle of good corporate governance are:

· Transparency: Transparency in action of the companies towards their stakeholder is one of the most important principle in corporate governance. It shows that companies do care about their stakeholders and are considerate in their action towards them.

· Fairness: The fairness is a principle which states that equal treatment to all the stakeholder of the company. The action of the company should be fair and consistent with certain level of ethical standard and it should not take action where it is trying to create values at the exploitation of the other stakeholder.

· Responsibility: Senior management of the company has the authority, especially C-level executives and Board of directors. They should take responsibility for the action they have taken in regard to creating values for their stakeholders. Accountability goes along with that when people are exercising their authority, they should also be held accountable for their actions.