Eight Principles Of Corporate Governance

Maximising profit is perhaps the main objective of every business. Higher profit means higher dividends, higher salaries and more money to spend on research and development and as a result expand the business (Audrey and Liao 2013, 277). However, in reality companies need to focus on other objectives in order for the business to survive. As stated by Suciu and Fisher (2014, 14) “ good profits are not enough anymore to maintain a high brand reputation”. In fact, businesses that has responsibility concerning their environment and community proven to create both good brand reputation and profitable business (Suciu and Fisher 2014, 14).

Hence, corporation must bear in mind for long-term sustainability, it need to focus on its relationship with

2012). As defined by the Australian Securities Exchange (ASX), “corporate government is the system by which companies are directed and managed” (ASX Corporate Governance Council 2003). In addition, ASX outlines eight principles of good corporate governance, such as “structure the board to add value, promote ethical and responsible decision making, safeguard integrity in financial reporting and respect the right of shareholder, etc” (ASX Corporate Governance Council 2003). These principles of good governance need to be employed by every organisation to ensure its integrity and avoid corporate

Corporate governance will ensure that rights and responsibilities are distributed equally and clearly among the board, managers, shareholders and stakeholders (Book). In addition, management adequacy and greedy managers who has the desirer for power will lead the company to failure. Therefore, every company need to ensure the objectives of the manager are aligning with the corporate’s objectives. Need to reward managers with high performance, by implement short-term or long-term intensive plans. Furthermore, companies need to keep up and adapt to new technologies changes. As technology is used as competitive advantage to enables firms to reduce cost, innovate and improve customer relationship