Essay on Effective Corporate Governance: Transparency, Accountability and Risk Management

Paper Type:  Essay
Pages:  4
Wordcount:  1073 Words
Date:  2022-12-29


Ideally, corporate governance is adequately described as an efficient way in which various corporations are controlled and managed with the chief aim of promoting corporate transparency, accountability, and objectivity. The structure of corporate governance comprising of the board of directors, components of the board, the board committees as well as the different levels of interactions and involvements amongst them predominantly facilitates the representation of appropriate decisions, code of conducts and strategies of corporations (Huse, 2007). Concerning the board of directors (BOD's) or rather the board of trustees within a corporation, it is a team of individuals who are jointly served with the responsibility of supervising the main activities within a firm that can either be a non-profit organization or a profitable business.

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A competent team of BOD's is primarily characterized by a clear or reasonable goals strategy for the corporation. For instance, a textile firm board of directors is required to conduct comprehensive market research to find a cost-effective niche, establish an active product line to fulfill the requirements of the targeted market as well as publicize their products through a marketing campaign that directly reaches the potential customers (Huse, 2007). In each phase of production, informing the corporate's workforce on the overall organization strategy will significantly help them focus on the company's objective of satisfying the needs of the targeted market. Chapter 2 and 3 of Morten's book "Boards, governance and value creation: The human side of corporate governance" further emphasizes on this by expounding on the corporate governance based on the BOD's and the various task expectations and theories of the board of directors (Huse, 2007). In chapter 2, the corporate governance has been depicted to concern chiefly on the collaborations of coalitions of stakeholders inside or outside the firm as well as the boardroom. The board members also possess some aspects and objectives, which all have a biased description towards corporate governance and consequently influence the expectations of the board responsibilities and the anticipations concerning the creation of value in an organization. The chapter also argues that the primary product markets including the markets for labor control, corporate control, all acts as control mechanisms or discipline for corporations. A significant component of the corporate target market is the threat of taking over from potential competitors (Huse, 2007). Nonetheless, a considerable percent of stakeholders and investors have recently emphasized the need for BOD's independence and the significance of separating the managerial position and the executive functions.

The implementation of good corporate governance hugely relies on the aspect of discipline and commitment when it comes to the functions of the board members. According to Morten (2007), "Boards, governance and value creation," the BOD's accountability and effectiveness is influenced by both the knowledge and motivation of the board members and also requires the adherence to various task theories of the board such as the value-creating theories, institutional perspective theories, formal tasks and barbarian theories (Huse, 2007). In chapter two of the book "Competing Values Leadership: Creating Value in Organizations," the author addresses the implications of creating value as the principal goal of the overall organizational performance and leadership (Cameron, Quinn, DeGraff & Thakor, 2006). One primary reason why corporations offer employment opportunities to different people is mainly attributed to the potential benefits these professionals bring to the organization, which exceeds the firm's cost of producing those benefits. Based on this perspective, the chapter explains that, various groups within an organization including the BOD's play a prominent role as value creators, when the value they create through policies and strategies they implement is higher than that of the resources they used (Cameron et al., 2006). In essence, in spite of the BOD's implementing smart policies to cope with the unexpected disasters that might cripple the buying power of the target market as well as the organization's operations, there are still underlying risks from the competitors who might come up with effective strategies to attract more of the customers in the industry. Effective risk management by the corporate's BOD's thus acts as a useful component in managing all these risks. For instance, the BOD's of a furniture company may opt to diversify the company's operations into various distinct markets instead of focusing on one to obtain revenues from each market. Robert and colleagues (2006) have emphasized this by stating that the competing values framework is an effective approach for any organization that seeks to have multiple types of value (Cameron et al., 2006). Financial value is vital, but a company should look for other strategies to increase the value or to have successful outcomes. Chapter 3 from the book "Beyond Winning: negotiating to create value in deals and disputes, the authors offers various strategies that the organizations can use to create value and negotiate effectively with the customers in resolving existing conflicts (Mnookin, Peppet & Tulumello, 2004). Essentially, it is the responsibility of the board of directors to be transparency in making decisions that help in solving current and future concerns as a substantial governance role of the corporation.


The subject concerning the components that contribute to the aspects of the board of directors is of considerable significance to study mainly because it plays a vital role in helping in understanding the primary tasks of the BOD in an organization. A corporate board especially in today's business world is a complex structure mainly concerned with company history and endeavors that contribute to or potentially undermines the overall success of a business. Often the directors are involved in functions that include collaboration and mentoring tasks, marketing, outcomes, internal control, and advisory responsibilities. One primary purpose of the BOD's is to develop or come up with effective corporate governance to oversee the overall operations of an organization. However, to ensure effectiveness, a company's BOD's must be accountable for their decisions as well as the performance of the organization by providing that they act according to some of the aspects that define the board like discipline and commitment. The high workload of the board concerning the development of strategies, policies, and resolutions is only manageable if the board demonstrates commitment in their meetings and the company's events.


Cameron, K. S., Quinn, R. E., DeGraff, J., & Thakor, A. V. (2006). Chapter 2: Competing Values Leadership: Creating Value in Organizations.

Huse, M. (2007). Chapter 2 & 3: Boards, governance and value creation: The human side of corporate governance. Cambridge University Press.

Mnookin, R. H., Peppet, S. R., & Tulumello, A. S. (2004). Chapter 3: Beyond winning: Negotiating to Create Value in Deals and Disputes, Harvard University Press.

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