Corporate governance structures can impact a company's performance from "summary" of How Finance Works by Mihir Desai
Corporate governance structures play a crucial role in shaping a company's performance. These structures encompass the rules, practices, and processes by which a company is directed and controlled. They influence how decisions are made, how resources are allocated, and how risks are managed within the organization. Effective corporate governance can enhance a company's performance by promoting accountability, transparency, and alignment of interests between shareholders and management. When there are clear lines of authority and responsibility, decision-making processes are more efficient, and conflicts of interest are minimized. Furthermore, strong corporate governance can help attract and retain talented executives and board members who are essential for driving the company's growth and success. By providing a framework for ethical behavior and responsible decision-making, corporate governance can also enhance a company's reputation and credibility in the eyes of investors, customers, and other stakeholders.- Weak corporate governance structures can have detrimental effects on a company's performance. Inadequate oversight and lack of transparency can lead to poor decision-making, financial mismanagement, and even fraud. This can erode investor confidence, damage the company's reputation, and ultimately harm its long-term viability.
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