The Important Key Elements Of Corporate Governance Finance Essay

1.1 Introduction of Corporate Governance

Corporate administration had defined by Cadbury Committee as the systems by which companies are directed and controlled. It is concerns the relationships among the direction, Board, stockholders and other stakeholders. Hence, it is about the manner or how the boards oversee the operation of a company by its director, and the answerability of the board members to the stockholders and company. Good corporate administration plays indispensable function in underpinning the unity and efficiency of fiscal market, and enhances the repute of the company.

1.2 The Important of Corporate Governance

1.2.1 Key Element to Attract Investors and Enhance Their Assurance

‘Investor Relation ( IR ) plays an of import function in pulling investor assurance and good administration in Malayan companies[ 3 ]‘ . Better corporate administration provides investors a timely airing of dependable, full and accurate information relates to the company. If OneFamily Berhad has promoted the unfastened revelation policies, they are able to pull more investors and heighten their assurance in puting in their enlargement programs[ 4 ]. So, the concern will hold support from its investors and will be more sustainable.

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1.2.2 Easy to Raise Capital

Good corporate administration can raise capital more easy and cheaply in the market where capital is a scarce resource. Since the board is traveling for naming, they need a high cost of planning and establishing an Initial Public Offering ( IPO ) . The procedure is boring and need to follow with regulative demand. Hence, the procedure may affect many parties and some of the cost may incur[ 5 ]. Besides that, OneFamily Berhad besides needs capital to fund the enlargement programs. If the company adopts good corporate administration, they are able to raise fund easy from the investors.

1.2.3 Prevent Corporate Scandals

Much state accent on corporate administration is because of the high-profile corporate dirts[ 1 ], globalisation and increased investor activism. Fiscal malpractice such as nontransparent of fiscal statement and gross misdirection may do the corporate dirt. Good administration promotes unfastened revelation policies, timely airing of dependable, full and accurate information to all participants and answerability. If OneFamily Berhad adopts good corporate administration, they can forestall from the corporate dirts through transparence of fiscal statement and unfastened revelation policies and to increase their repute.

1.2.4 Long Term Sustainability

Corporate administration contributes to sustainable economic development of the company. It can be done by enhances the company public presentation and increase their entree to capital outside the company. Well governed company normally outperform other companies and is accountable and transparence to its stockholders and other stakeholders. So, fundamentally they are more sustainable compared to weak corporate administration company. Improve in internal control system will guarantee the quality determination devising of company. Since OneFamily Berhad decided to diversify their concern in other industry, what they need is the long term sustainability of the concern and to derive competitory among their investors.

1.2.5 Protect Shareholder Right

Corporate administration protects the right of stockholder by enhance revelation and transparence. It addresses the bureau job throughout a combine of company jurisprudence, stock exchange listing regulations and self-regulatory codifications. Since OneFamily Berhad traveling to be listed in Bursa Malaysia, the manager needs to move bona fide and accountable for the success of company and maximising stockholder ‘s wealth as manager has owed their responsibility to company and stockholder. Better corporate administration ensures that stockholders are sufficiently informed on determination refering cardinal issue. Hence, stockholder right can be protected by transparence of the fiscal statement and seasonably and accurate revelation of information.

1.2.6 Build Reputation and Brand Image

Good repute enhances profitableness of the company because it attracts clients to merchandises, investors to securities and employees to its occupations. Besides, company act ethically and governed in a good mode builds a reputational capital which is competitory advantage. If OneFamily Berhad follow a good corporate administration, they are able to increase their repute and trade name image of the company. Hence, they able to pull more expertness ( employee ) work for them in the monkey-breeding farm and carnal proving research lab. On the other manus, good corporate administration besides helps them to pull local and foreign pharmaceutical ( client ) and public ( investor ) to fund in the concern.


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