How Corporate Governance Affects the Financial Performance of Companies

Corporate Governance
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Corporate Governance > Best Practices

Sarah Daghman, Lecturer, Russian Federation
Corporate governance affects the financial performance of companies through several channels, the most important of which are: 1. Expanding access to external financing sources. Effective application of corporate governance principles leads to facilitating access to capital markets and increasing the credit rating of the company by eliminating the two most important barriers to accessing external finance (the inconsistency of information between financiers and borrowers due to poor accounting; non-discloser of the important information and neglecting interested parties associated with the company). Companies with an effective corporate governance system can increase investor confidence and increase the firms' access to capital, therefore improve their financial performance. 2. Increasing the company's value. Investors usually pay higher prices for purchasing company shares that have effective adherence to corporate governance principles, since it protects their rights, especially the (...) Read more? Sign up for free

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  Reinaldo Schumann, Entrepreneur, Brazil
 

Main Corporate Governance Function

Perfect! The main function of the entire Corporate (...)

  Jaap de Jonge, Editor, Netherlands
 

3 Main Functions of Corporate Governance

Actually Corporate Governance has 3 functions (see (...)

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Corporate Governance Should not Focus Solely on Financial Performance

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