|Corporate Governance |
|The Importance of Corporate Governance in Organizations |
|Final paper |

SOUTHERN TAIWAN UNIVERSITY

DEPARTMENT OF BUSINESS ADMINISTRATION

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Julia Vassiljeva

m987z202

Taiwan
2010

The importance of corporate governance in organizations

With the recent financial crisis, companies’ defaults and crushes, the importance of corporate governance has risen significantly. Corporate scandals that have impacted companies all over the world have led to the re-examination of the role of corporate governance in their day to day operations.

The Organization of Economic Cooperation and Development (OECD, April 1999) defines corporate governance as follows: "Corporate governance is the system by which business corporations are directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, such as, the board, managers, shareholders and other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs.” (Hebbie A., Ramaswamy V., 2005)
Some corporate governance problems, as for example CEO’s almightiness, Board of Director competencies, shareholders interests, etc, become important only when some organization gets