The Transparency in Corporate Governance Essay

The transparency in Corporate Governance - Essay ExampleShareholders and investors are being defrauded and deceived on the real attitude of earning and expenses within the firm through financial statements that are not entirely accurate. Such failures of unified politics have produced a negative impact on investor confidence and made them question the integrity of learning that is provided in the financial statements of a corporate entity.1 The development of corporate institution codes has as its primary objective, the paying back and increase of investor confidence through increased accountability and transparency in corporations2. Effective corporate governance enhances investor confidence, enhances competitiveness and ultimately contributes to economic growth.Transparency in corporate governance implies a lack of opaqueness or secrecy in financial operations and is thus associated with full disclosure of financial and operable information. Transparency implies that there are no hidden agendas and that clear information is provided, not only on financial and operational aspects but also on the internal processes of management overseeing and control systems. It is on the posterior of such complete disclosure of information that a meaningful analysis of the Company can be made and outside investors who put their money into an organization can understand its operations clearly and dedicate good investment decisions. Transparency can therefore mitigate the risks associated with corporate governance and the potential for corporate scandals.In countries such as the USA and the UK, ownership of shares in corporations extends over a widespread stockholder base. This leaves scope for potential conflict, arising between the interests of the stakeholders in the corporation and the Boards of Directors who could allow their own self-interest to influence organisational decision-making.