Rationale for corporate governance

The organization of the world economy (particularly in present years) has seen corporate governance gain prominence mostly since:

• Institutional investors, as they look for to invest finances in the worldwide economy, insist on high standard of Corporate Governance in the companies they invest in.
• Public attention concerned by corporate scandals and crumples has forced stakeholders to cautiously consider corporate governance issues.

Corporate governance is thus significant as it is concerned with:

• Profitability and effectiveness of the firm.
• Long-term competitiveness of firms in the worldwide economy.
• The relationship amongst firm’s stakeholders