The main purpose of corporate governance is to facilitate effective, entrepreneurial and prudent management that can deliver long-term success of the company. It is a system by which companies are directed and controlled.
Boards of directors are responsible for the governance of their companies. Corporate Governance literally describes the forms and development of the direction and control of members of a group. It is linked with holding the balance between economic and social goals and between individual and communal goals.
In addition, corporate governance also decreases wastage, corruption, and mishandling of resources. Good corporate strategies and objectives than an organization or company have allowed for less wastage, it also allows for no corruption because there is no mishandling of resources owing to the fact that everyone knows where resources are to be designated and used. It also arranges the relationships among investors, boards of directors, managers, and other stakeholders. It helps to maximize long-term shareholder value by developing corporate decision making and performance.Furthermore, good corporate governance fills the democratic values of fairness, accountability, and transparency into organizations. It maintains the integrity of business transactions and in so doing strengthens the rule of law and democratic governance.
Good corporate governance allows for the description of private rights and public interest and the avoidance of their abuse. In order for an organization to be effective, it must be accountable, responsible and transparent.