Introduction
Every organization is already plagued with various internal problems. Added to that is the unexpected external uncertainties like the economic downturn, financial crunches, and other globalized crises. However, through the effective leadership and monitoring that lies within every organization, there is a great potential for most of the businesses to turn their weaknesses to opportunities.
Background and Problem Statement
Across the globe, the countries that suffer much on the global threats in their economy are the developing countries that struggled much in order to continuously adjusting their pace and reach the status of development. It is said that a strong economy mirrored by a strong leadership, even in a small and medium scale businesses. The appropriate use of leadership in the organization is the most desirable method that can be ever be implemented. Most of the defined corporate strategies are the ability of the business to use the corporate governance in keeping the company aligned with their goals and objectives. However, what would be the central problems of the corporate governance that might be present among the companies, particularly in Pakistan.
Research Aims and Objectives
The aim of the study centers in discovering the problems that may exist among the Pakistani companies regarding their implementation of corporate governance. In order to support this aim is through the three objectives that can be also the guidance of the study. The first objective is to determine the effectiveness of corporate governance in the organizations across the Pakistan. Second is to investigate the center problem in terms of implementing the corporate governance in the Pakistani organizations. And third objective is recognizing the mechanisms on corporate governance that appears in the respective organizations.
Literature Review
Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation (or company) is directed, administered or controlled. A good corporate governance reduces emerges in the market vulnerability to the financial crises, reinforcing of the property rights, reduction on the transaction costs and the cost of capital that in the long run will lead in the market development. On the other hand, the weak corporate governance can influence the reduction of the confidence among the investors and can also discourage the external investment. And it definitely created various impacts in every part of the organization but the pressure can be often felt by the shareholders. In corporate governance, the relationships among the many stakeholders involved and the goals for which the corporation is governed is also included. The corporate governance systems are typically described as “insider” versus “outsider” systems, as “shareholder” versus “stakeholder” capitalism, or as involving “equity-financed” versus “debt-financed” firms. The corporate governance models as well as the reforms around the world are diverse but are evidentially in use of the corporate governance mechanisms.
The corporate governance in the organization is an essential process wherein every organization should incorporate all their practices. With the provision and guiding codes of the corporate governance, the organization are aligned in reaching for their goals thus, lessening the different threats that usually comes in the internal part of the organization. The idea of corporate governance as well as creation of strong relationship among the shareholders is a great opportunity that the organization can provide. Most of the shareholders feel doubt in the ongoing operation for their investment is incorporated in the cycle of the business. The good return or profit of the business might help lessen their worries and promotes good leadership.
The practical models for governance have commonly accepted different principles toward its effectiveness and efficient corporate governance. The rights and equitable treatment of shareholder is where organizations should respect the rights of shareholders and support them to exercise their rights including the security of ownership of their shares, right to vote, sharing information, and making participation in decisions. Also, the organization should recognize that they have legal and other obligations to all legitimate stakeholders such as giving emphasis on their interest.
Methodology
The suggested methodology that can be applied in the study is the use of secondary information that can illustrate the implementation of corporate governance, most especially in Pakistani organizations. Through the utilization of secondary organization, the policies, laws, set of processes and even the institutions can be fully detailed. The importance of secondary information is that, there is an important set of information that can be gathered in order to accommodate what are the queries involved in the study.
Works Cited:
Heugens, P., & Otten, J., (2005) “Corporate Governance Reforms around the World”, Tjalling C. Koopmans Research Institute, Accessed 02 June 2010, from http://www.uu.nl/uupublish/content/05-08.pdf
ROSC, (2006) “Corporate Governance Country Assessment”, Report on the Observance of Standards and Codes Accessed 02 June 2010, from http://www.worldbank.org/ifa/rosc_cg_sen_eng.pdf
SECP, (2003) “Impact Assessment of the Code of Corporate Governance 2002”, Accessed 02 June 2010, from http://www.secp.gov.pk/Reports/ImpactStudyCCG.pdf
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