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FAQs on DU B.COM CORPORATE GOVERNANCE 462 SEM5 2014 PAPER - B Com

1. What is corporate governance and why is it important?
Ans. Corporate governance refers to the set of rules, practices, and processes by which a company is directed and controlled. It involves balancing the interests of a company's stakeholders, such as shareholders, management, customers, suppliers, financiers, government, and the community. Corporate governance is important because it helps to establish transparency, accountability, and ethical behavior within a company, which in turn promotes investor confidence, attracts investment, and ensures long-term sustainability.
2. What are the key principles of corporate governance?
Ans. The key principles of corporate governance include accountability, fairness, transparency, and independence. Accountability refers to the responsibility of a company's directors and management to act in the best interests of shareholders and other stakeholders. Fairness ensures that all stakeholders are treated equitably and that conflicts of interest are properly managed. Transparency emphasizes the disclosure of relevant and accurate information to stakeholders. Independence refers to the need for independent directors and auditors to provide objective oversight and assurance.
3. How does corporate governance affect the performance of a company?
Ans. Corporate governance has a direct impact on the performance of a company. Good corporate governance practices, such as effective board oversight, clear decision-making processes, and transparent reporting, can enhance a company's performance by improving its strategic direction, risk management, and financial controls. It also helps to attract and retain talented executives, as well as gain the trust and confidence of investors and other stakeholders. Conversely, poor corporate governance can lead to mismanagement, unethical behavior, and financial instability, which can negatively impact a company's performance.
4. What are the challenges faced by companies in implementing effective corporate governance?
Ans. Companies may face several challenges in implementing effective corporate governance. One challenge is the resistance to change from existing management and board members who may be used to operating in a less transparent and accountable manner. Another challenge is the lack of skilled and independent directors who possess the necessary expertise and knowledge to effectively oversee the company's affairs. Additionally, companies may face challenges in aligning the interests of various stakeholders, managing conflicts of interest, and ensuring compliance with applicable laws and regulations.
5. How can shareholders contribute to improving corporate governance?
Ans. Shareholders play a crucial role in improving corporate governance. They can actively participate in the company's decision-making process by attending and voting at annual general meetings, raising concerns, and asking questions. Shareholders can also exercise their voting rights to elect independent and competent directors and support initiatives aimed at enhancing transparency and accountability. Moreover, shareholders can engage in dialogue with the company's management and board to express their expectations and concerns regarding corporate governance practices. By actively engaging and holding companies accountable, shareholders can contribute to improving corporate governance standards.
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