An important part of value of an organization is the governance process. Let's think about the idea of corporate governance further and why it even exist? Is there a simple answer? The basic purpose of business is encapsulated by the understanding that business is an interaction between producers and consumers. In this relationship there exist two maximizations: profit maximization and utility maximization (Dispasri, et al.,2011). "When the ownership is sliced up under the straitjacket of corporate structure, profit maximization turns into value maximization of shareholders" (Dispasri, et al.,2011, para 1). Is anyone in this class a shareholder of an organization? What power does that give you? Stockholders are the real owners of the corporations, and yet the corporations the power and management of the organization is with the Board of directors, CEOs and CFOs and other "managers". Isn't this is a situation ripe with possible conflicts of interest? So, how do we resolve or mitigate this conflict of interest? Corporate governance has come into existence to reduce or eliminate this conflict of interest (Dispasri, et al.,2011).

So, tell me - do you think Corporate Governance should be a measure of value?

Answer rating: 100% (QA)

Yes corporate governance should be considered a measure of value for an organization Heres why 1 Alignment of interests Corporate governance aims to a... View the full answer