By Robert Adamson
Executive Director, CIBC Centre for Corporate Governance and Risk Management

“As corporate governance continues to be an area of focus for most companies, regardless of whether they are involved in global operations, there are many questions and issues that firms still struggle with:  What is good corporate governance and why is it so important? Why are so many firms and governments promoting improved techniques in corporate governance? What are those techniques and best practices and is there evidence that these reforms and policies are useful for firms in promoting transparency, sustainability and the confidence of global markets and investors?

In general, corporate governance is about how companies make decisions, how they organize themselves and how they communicate with shareholders and the rest of the world. Typically, corporate governance deals with issues such as how boards and executives are chosen, what mandate and responsibilities boards and executives have,  whether shareholders have any right to participate in certain types of corporate decisions through voting and, if so, what form these shareholder rights take.

These issues are important because they promote good business practices, good decision-making and opportunities for investors to ensure the integrity of their investment. Because these issues are so important to developing good businesses and a good business environment, both companies and policy-makers are very interested in ensuring that good corporate governance is adopted widely and is effectively institutionalized throughout the firm.

So why are companies themselves so concerned and preoccupied with corporate governance, risk management and CSR? Many companies recognize that good corporate governance, risk management and CSR is good business practice, good business strategy and what many companies are focusing on to improve their business, particularly in the emerging global marketplace where companies are constantly trying to outdo each other to make their business more effective and to attract new investors. Companies, particularly those that are well-managed, want to develop good business practices, improve their decision-making and provide reasons for investors to invest in the company. While these firms are highly motivated and successful at adopting and implementing good corporate governance practices,  other companies may not acknowledge the importance and value of adopting and investing in corporate governance, risk management and CSR…”

This is an extract from business.sfu.ca, to read more: http://business.sfu.ca