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Importance Of Corporate Governance

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Corporate governance is the framework by which organizations are coordinated and controlled. It manages the connection between management, investors, chief directors and other stakeholders. With respect to good governance, the board is responsible for the management of the company and shareholders are responsible for the appointment of directors and auditors that are suitable for corporate governance framework. Corporate governance is projected to increase the accountability of companies and to circumvent monstrous calamities before they occur. Failed energy giant Enron, and its insolvent representatives and investors, is one of the main disputes for the significance of strong corporate governance.
Objectives of King IV
 Promote corporate …show more content…
Failure to do so, which is being displayed in this scenario, may result in a conflict between management and shareholders which may have a detrimental impact on the future prospects of the company, such as, current shareholders losing faith in the management of the company and thereby forcing them to withdraw from Naspers. It may also affect the ability of Naspers to attract potential investors to the company.
Core Value of King IV
Sustainable development is a objective of King IV, which is understood as the advancement that addresses the issues of the present without trading off the ability of future generation to gratify their own needs. Sustainable development is also in line with the Triple bottom line reporting which gives states that preservation of the environment and society is essential for a company to be economical and viable.
The success of a company is not only dependent on its performance, but also, corporate governance. In fact, corporate governance is equally as essential as performance. Companies with effective corporate governance structures achieve higher valuations, by improving the image (goodwill) of the company and thus attracting potential investors to the company and effectively satisfying the current …show more content…
One of the recent examples of corporate governance fails is Lehman Brothers, Lehman’s plunge into high-risk businesses in the years before its bankruptcy has become a familiar story. During this period of aggressive growth, Lehman developed significant exposures to risky subprime lending, commercial real estate, structured products, and high-risk lending for leveraged buyouts. Importantly, the Valukas Report indicates that Lehman repeatedly breached its own risk concentration limits in pursuit of higher

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