Farhan Al Shammari*
About Corporate Governance

Corporate Governance is a set of control mechanisms that created to avoid any conflicts of interest between organization management and shareholders according to these mechanisms (laws and regulations).

Corporate governance aspects are:

1. Mechanisms of directed and controlled.

2. Boards are responsible for the governance. 

3. Shareholders will designate the directors and the auditors.

4. Establish an appropriate governance structure.

5. Corporate governance is the part of national and international standards.

6. Corporate social activities are performed voluntarily and mandatorily. 


The Board responsibilities include:

1. Setting the company’s strategic objectives.

2. Providing the leadership roles.

3. Supervising the management of the business and 

4. Reporting to shareholders.

Corporate governance is therefore about: 

1. The role of the board of a company.

2. The sets the values of the company.

3. Operational management.

As the corporates have big resources, they are required to spend some of the portion of their benefit to the local society by building and creating programs in term of Corporate social responsibility (CSR).

Here we will go through the main guides corporate governance which simply are the theories of corporate governance that to be applied:

1. Moral hazard theory.

2. Stewardship theory.

3. Stakeholder theory.

4. Evolving at resource dependence theory, 

5. Transaction cost theory.

6. Political theory. 

7. Ethical theory.

8. Efficient markets theory.

These theories are defined and applied  based on the causes and effects of variables and decision making such as: 

1. The configuration of the board of directors.

2. Audit committee.

3. Independence of managers and their authorities.

4. Review and supervise the senior management role.

5. Corporate Social Responsibility - CSR framework.

That we should notice and consider that as a conclusion that the development of theories and models of corporate governance updating continuously and in fact there is no final, single or optimal form of effective corporate governance.


Farhan Hassan Al Shammari

Twitter: @farhan_939

E-mail: fhshasn@gmail.com

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