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CORPORATE GOVERNANCE Corporate governance mainly refers to the set of systems, principles, rules, and processes by which a company is directed and managed. It includes certain processes through which objectives and goals of corporations are made and pursued in the context of the social, regulatory, and market environment. These include monitoring the actions, policies, and decisions of corporations, their agents, and affected stakeholders. A company’s corporate governance is important to investors because it shows a company's direction and business integrity. Good corporate governance helps companies to build trust with investors and the community. And hence, it promotes financial viability by creating a long-term investment opportunity for market participants. 1. OBJECTIVES OF CORPORATE GOVERNANCE [1] Corporate governance has various objectives to strengthen investor’s confidence and which in turn leads to fast growth and profits of companies. The fundamental objective is to maximize shareholder value and protect the interest of other stakeholders. Other common objectives are listed below: •	Creating social responsibility. •	Creating a transparent working system. •	Creating management accountable for corporate functioning. •	Protecting and promoting the interests of shareholders. •	Developing an efficient organization culture. •	Provide aid in achieving social and economic goals. •	Improve social cohesion. •	Minimize wastages, corruption, etc. 2. PILLARS OF CORPORATE GOVERNANCE

Fig 1. Three pillars of corporate governance Transparency, accountability, and security are the 3 pillars. All these 3 pillars are essential for a company to run successfully and to form a solid relationship among its stakeholders which include the board of directors, managers, employees, and shareholders. 1.	Transparency For a company, it meant to allow all its processes and transactions observable to outsiders. It’s an essential component because it ensures that all of a company’s actions can be checked by any outsider at any provided time. Thus, makes all its processes and transactions transparent and verifiable, so if a question arises about a step, the company can clear it by providing an accurate answer. Transparency also provides a strong bond with shareholders since the corporate board is open about their actions.

2.	Accountability Accountability accounts mainly to preserve integrity. It mainly put forth a system of keeping responsibility on someone if any of the company’s action goes wrong or if anything better happens. If the actions of anyone are good or bad, it’s all about having ownership. So, accountability not only covers failings but also accomplishments.

3.	Security As there’s an increase in security breach this pillar plays a vital role in maintaining corporate governance. Companies that experience security breaches involve exposure to their clients’ personal information which adversely affects the credibility of the company. If any breach has been caused, it will create a negative effect on a company’s stock market performance. Thus, for a company to keep its credibility and for keeping good governance all three pillars have to work parallelly.

3. 4 P’s OF CORPORATE GOVERNANCE Fig 2. Four P’s of corporate governance For the simplicity of knowing what all are the components of corporate governance, they split it into 4 simple words; People, Purpose, Process, Performance. People: Among the 4 P’s People should be the first ones. It’s because for a company people exist on every side. From the very beginning of a company, people are vital. Starting from the founders, the board, the stakeholder, consumer, and even the impartial observer are all coming under this P. People are the organizers who determine a purpose to work towards, they are the ones who consistently work towards achieving a goal, to evaluate performance outcomes and to grow from those outcomes too people are the ones in need of. Purpose: Purpose is the next step. Every company works on the motive to achieve a purpose and every governance exists for a purpose and to achieve that purpose. Process: The term ‘governance’ from corporate governance mainly depicts the process by which people achieve their company’s purpose with the help of people and that process is being developed and modified by analyzing performance. In order to consistently achieve their purpose, processes are refined over time. Performance: Key skills in any industry. The results yielded by a process needs to be categorized as successful or not. The ability to look at those results and to apply those findings to the rest of the organization is one of the primary functions of a governance process.

4. PRINCIPLES OF CORPORATE GOVERNANCE [2] Principles are actually something that makes an organization’s foundation strong enough to support growth. Corporate governance has a certain set of principles.

Fig 3. Corporate governance principles Principles of corporate governance are listed below: •	Acting ethically and responsibly. •	Ensuring accountability and transparency. •	Recognizing and managing risks. •	Ensuring correct board composition and structure. •	Maintaining a strong quality management framework. •	Clearly defining the purpose and strategy.

5.APPROACHES TO CORPORATE GOVERNANCE [4] There are mainly two corporate governance approaches. They are: 	Rules-based approach Mainly based on the view that companies must be required by law or by some other form of strict regulations to comply with established corporate governance principles. There may be certain exceptions to the rules for a certain type of company (eg: Stock market companies). Countries like the US follows this type of approach. 	Principle-based approach It’s an alternative to a rules-based approach. This Follows the concept that a single set of rules is inappropriate for every company. Mainly depends on the circumstances and situations. This means that most suitable corporate governance practices can differ between companies and the best corporate governance practices for a company might change over time, as its circumstances change. Countries like the UK are following this approach and are applied to all major companies. Fig 4. Approaches to corporate governance

6. ADVANTAGES OF CORPORATE GOVERNANCE [3] Corporate governance is having certain advantages as listed below: 1.	Ensure market performance and economic development. 2.	Maintains investor trust and enables the business to raise capital effectively and efficiently. 3.	Helps to build and develop brands. 4.	Reduces capital costs. 5.	Enables better strategic plans. 6.	Provides adequate opportunities to meet goals in the interests of shareholders and business. 7.	Enhanced performance.

7. DISADVANTAGES OF CORPORATE GOVERNANCE 1.Cost of monitoring: For a shareholder to effectively govern a publicly traded corporation, they must speak with one voice and need enough votes to allow that voice to have any real weight. This requires individuals that have a collective vision for the company to pour more money into the company to gain a controlling share. 2. Easily corruptible: The lack of government oversight may lead to a misallocation of credit that actually worked against the competition. 3.Family owned companies: Certain family-owned firms may lose objectivity in business making decisions due to the family’s financial investment in the business.[3]

8. IMPORTANCE OF CORPORATE GOVERNANCE When a corporation has solid company governance, it signals to the market that the organization is well managed in which the interests of management are aligned with external stakeholders. As a result, it will give your company a powerful competitive advantage. This lays down the framework for creating long-run trust between the company & external generators of capital. [5] A positive impact on financial reporting can be made by good corporate governance. Because they reduce the risk for investors, improves financial performance, and attract investors. Good corporate governance will be having a high amount of shareholders and other investors. On the other hand, these shareholders will look more at long-term indicators such as the capital structure of the company, past and present income, and also changes in financial position. Financial Statement is something that’s having a crucial impact on better corporate governance. The main element of corporate governance is the shareholders and for their betterment, all three elements of financial statement (income, cash-flow, balance sheet) work a pivotal role. They clearly provide a snapshot of the business’ health. Corporate governance also emphasizes the adoption of transparent procedures & practices by the Board and thus ensure integrity in financial reports. CONCLUSION AND RECOMMENDATIONS Strong and effective corporate governance helps to develop a culture of integrity in the company and leads to positive performance and a sustainable business overall, it exists to extend the answerability of all people and groups among the company, operating to avoid mistakes before they'll even occur. It rationalizes the management & monitoring of risk that a company faces globally. Corporate Governance can be improved further by including certain other factors such as corporate responsibility, prioritizing risk management, constantly evaluating board performance, ensuring timely information, and increasing diversity.