Effectiveness of corporate governance and measurement challenges

Abstract

Growth and profits are key performance indicators for sustainable Corporations. As a result of this, competition between corporations has become intense with everyone trying to outperform the other. In this process there are performers, losers, winning situations and crisis situations. These outcomes are a result of how effectively the corporations/organizations are managed/governed. The Business World in the last few years has witnessed a financial crisis due to several reasons. One of the key reasons for the crisis has been attributed to lack of good and effective Corporate Governance. In light of the Global Financial Crisis that began in 2007, this paper tries to establish the importance of effective corporate governance. The paper has traced these failures stemming from the perspective of corporate governance by looking at different reports. It goes on to define a Corporation from the perspective of the stakeholder expectation, and the importance of Governance, it brings out the systemic gaps against this background. It further goes to identify the factors contributing to effective corporate governance, how it could be measured and the challenges involved in the process. Based on this understanding it proposes an approach which can be used to define a framework to measure the effectiveness for Corporate Governance.