Corporate Governance: Compliance or Competitive Advantage?
Vision Research - A National Research Journal (ISSN 2250-2025), Vol. 4, No.1, pp. 96-104, January, 2014
12 Pages Posted: 24 Jan 2014 Last revised: 25 Mar 2014
Abstract
Corporate governance stands for responsible business management geared towards long-term value creation. Views of corporate governance are shifting from mere obligation and compliance with laws and listing standards, to a business imperative for many firms. Corporate governance significantly influences the firm performance. Good corporate governance is a key driver of sustainable corporate growth and long term value creation. Corporate governance is a priority for firms because it presents opportunities to manage risks and add value. Corporate governance has come to be viewed as a differentiator among firms as good governance practices provide a sustainable competitive advantage. This paper highlights various meanings and definitions of corporate governance and recommended standards of corporate governance. Paper also discusses principal drivers for an increased demand for good corporate governance. An increasing amount of empirical evidence shows that good corporate governance contributes to competitiveness and long term value creation. Corporate governance rating is positively associated with financial performance. Paper emphasizes benefits of good corporate governance and also lists finding of prior studies.
Keywords: Corporate governance, Competitive advantage, Disclosure, Tobin's q
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