Good Corporate Govenance The Cornerstone of Company Success

Opinion / Ethics and Responsibility


Good Corporate Govenance The Cornerstone of Company Success
Mutizhe , Student (Other), Zimbabwe

The importance of Corporate Governance is evident from the many company failures which has been an international phenomenon


The importance of Corporate Governance is evident from the many company failures which has been an international phenomenon.A recent example is the colapse of Lehman brothers in th States. The main pillars of corporate governance to me are Accountability and Rationalisation of Directors emoluments and Perfomance. Accountability being central, especialy down here in Southern Africa . The ailing of many companies, parastatals, local govenment bodies has been a result of lack of accountabilty , and graft where contracts are awarded to non perfoming contractors. Such companies in the end do not have any competative advantage as they are well connected and thus guranteed of contracts. In the end they fail the moment it graft is exposed or if their network collapse. The enforcement of accountability is difficult,countries try by enacting corporate governance codes. though helpful there is need for greater shareholder input.It is important that shareholders use annual general meetings for their pupose not to rubber stamp management decisions,or taking it as a formality.Of note is that only major shareholders have a say in how the companies are being run, and they either do not use their say orthey are not aware of their power, leaving the company on auto pilot. This ussually leads to astronomic remuneration of directors and unnecessary loans. In the end you find a capital depleted and none delivering company whose directors are amoungst the highest paid in a country and having $600 000.00 dolar loans, or management getting 80 % of the total wage bill, which is absurd.

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