Introduction
The essence of effective and efficient leadership and governance is one of the emerging aspects that are compelling organizations to embrace such strategies to achieve a competitive advantage (Bai, 2004). The increase on capital markets competition plus the demand on different markets based issues are some of the major factors forcing corporations to develop effective and efficient strategies on positioning their corporations in global competitive position. This depicts need to ensure corporate governance forms a critical entity in relation to defining the competitiveness of the organization.
Through conducting a detailed literature review on corporate governance, the paper seeks to offer a clear insight on some of the approaches availed by different researchers in relation to the topic under the study. The study uses secondary sources of data to gather information aligning with the topic under the study. The secondary method approach entails examining the different sources of information from books, websites, articles, and other sources that retain and contains information relating to the topic under the study. Through integrating the respective validity and reliability measures to ensure that the information generated in reliable on decision making, the paper defines the respective analogies that underpins the topic under the study hence providing clear entities in relation to the topic under the study. Dynamic environment under which organizations are operating has forced managers and leaders to be under pressure on need for effectiveness and efficiency in service delivery. Organizations have embraced more approaches other than the common notion on increasing revenues but monitoring external environment.
Methodology
Through conducting a qualitative form of study by examining the secondary sources, the study defines some of the key issues that are attached to corporate governance to establish the positive connection towards increasing organizational effectiveness. Different strategic measures and approaches were enacted to ensure that the mythology of the study aligns with the set standards hence ensuring reliability and validity of the data collected and information generated. The data collected is generated from the reviewed literature sources with a detailed analysis on comparison based on the arguments presented by the writers and researchers availed. The essence of examining such entities is to offer a detailed analysis where the respective aspects underpinning the study are examined while also ensuring that the set objectives of the study are achieved.
Literature Review
The concept underpinning literature review section is to develop a detailed analysis on secondary sources based on different researcher’s arguments relating to the study. Through developing a conceptual framework, the section defines different approaches and theories provided by different researchers in relation to the topic under the study. Identifying the theories and gaps on some of the literatures examined based on the arguments and approaches used by some of these researchers are one of the core factors that define effectiveness in literature review. The preceding analysis incorporates the stipulated concept to offer a detailed analysis while achieving some of the mentioned entities as defined by the section.
According to (Brown, 2006), corporate governance has undergone different reforms facilitated by different entities within the global environment such as changes in financial markets, economic growth, regulations and increasing concern on environmental issues. The same arguments are presented by (Daily, 2003), where he indicates that the respective reforms reflects not only different nations need to increase the rate if the economic growth but also in an aim if competing in the global market. The researcher argues that these reforms have been enacted in dynamic perspectives towards tapping the benefits and the opportunities availed under globalization and modernization that has been accelerated by technological advances.
The essence of incorporating effective corporate governance strategies based on the changes in global environment while ensuring the set organizational goals and objectives are achieved is one of the major areas that researchers have examine. According to (Dalton, 2003), the essence of such strategies is to ensure that the organization is able to compete on the global market while also reflecting the set policies of the nation or society under which it operates. However, (Zhang, 2004), argues that such entities are not the major aspects that defines essence of corporate governance but the economy and the government based policies. The analogy attached to the arguments presented by the researcher can be traced back in prior days where the private organizations faced numerous problems in relation to exercising oversight over managers based on the long delays on judicial proceedings related too issues of bankruptcy. Such situations where poor corporate governance with no private involvement can be traced back in India where the order of the day was an economy where the public offerings were only made at the government set prices without consideration of the various market forces and the role played by the private agencies (Baker, 2007). The results on the corporate governance on such cases were the deterioration of the India firms forced them to seek capital outside and also primarily rely on the government sources. Poor performance of Indian economy was one of the major outcomes of such scenarios. The notion traced on the stipulated analysis depicts that positive corporate governance is vial towards increasing organizations valuation based on the participation and competition via availing equal opportunities to both public and private corporations.
Poor government policies such as those developed by Indian government failing to provide a positive connection between corporate governance and company valuation can have marginal implications such as fiscal crises (Kim, 2005). Such a crises was experienced in India in 1991 forcing the government to enact different reforms such as reduction in state provided financing, bank privatization and also general economic liberation. Some nations have been forced to develop standards and approaches that define the form of corporate governance in the nation. According to (Black, 2005), such measures and standards are mandatory to every corporation with failure to adhere to such standards having marginal implications to the company. The researcher argues that some of the mainly affected nations on poor corporate governance that affected their daily operations hence need for reforms where emerging economies in different countries. The reforms are constantly adjusted in an aim of ensuring effective corporate governance to align with the dynamic global economy. Although researchers have depicted essence and the historical approach on corporate governance, it is evident that they fails to offer strategic approaches on how to ensure individual company enacts strategies to enhance effectiveness on corporate governance. The stipulated literature review examining arguments and theories availed by researchers provides a generalized analogy depicting the issue under the study.
Some of the key issues that can be traced on the stipulated analysis based on the arguments indicate the fact that corporate governance is vital not only for individual company but entire nation and global economy. Baker et al (2007) conducted a survey using monthly governance rating as complied by Alliance Bernstein where 22 emerging countries were evaluated towards examining impact of firm level and country level governance on market valuation and operating performance. The survey concluded that improvement in governance have little effect on market valuation in most of the countries that have strong investor protection, positive and significant effect in countries with intermediate investor protection lastly a negative and quite significant effect in countries that possessed weak investor protection.
Conclusion
Corporate governance is vital in relation to defining company valuation in global markets and economy of the respective countries. The stipulated analysis depicts the fact that through establishing best corporate governance through different factors as depicted in the study, companies can improve on performance with respective market of involved countries growing. The analysis stipulated depicts that high standards of corporate governance are likely to lower the company valuation of the respective implementation cost is not met by the stakeholders. This depicts the fact that most of these organizations that are able to establish the high standards of corporate governance require significant funds or resources towards ensuring that the best output on company valuation are established. However, there is need for future study where individual company corporate governance is examined to establish positive impact on the local and global market. The diversity on the topic of corporate governance depicts the essence of developing a more precise analysis to examine impact of an individual company on economic performance and global impact.
References
- Bai, C., Q. Liu, J. Lu, F. M. Song, and J. Zhang 2004 Corporate governance and firm valuations in China. Journal of Comparative Economics, 32 (4), 599-616.
- Baker, E., B. Godridge, A. Gottesman, and M. Morey 2007 Corporate governance ratings in emerging markets. Working paper, Pace University.
- Bhattacharyya, Asish K and Sadhalaxmi Vivek Rao (2005), "Economic Impact of 'Regulation on Corporate Governance': Evidence from India," at http://ssrn.com/abstract=640842.
- Black, B. S., W. Kim, H. Jang, and K. S. Park 2005 Does corporate governance predict firms' market values? Time-series evidence from Korea. University of Texas School of Law, Law and Economics Research Paper n. 51.
- Bhattacharyya, Asish K and Sadhalaxmi Vivek Rao (2005), "Economic Impact of 'Regulation on Corporate Governance': Evidence from India," at http://ssrn.com/abstract=640842.
- Black, B. S., W. Kim, H. Jang, and K. S. Park 2005 Does corporate governance predict firms' market values? Time-series evidence from Korea. University of Texas School of Law, Law and Economics Research Paper n. 51.
- Brown, L. D., and M. L. Caylor 2006 Corporate governance and firm valuation. Journal of Accounting and Public Policy, 25 (4), 409-434.
- Daily, C., M., Dalton, D., R. and Cannella, A., A. (2003), “Corporate Governance: Decades of Dialogue and Data”. The Academy of Management Review, 28(3), 371-382.
