EFFECT OF CORPORATE GOVERNANCE ON THE PERFORMANCE OF AN ORGANIZATION

In recent years, Commercial Supremacy has become crucial in many developing economies. A convenient corporate governance structure in an organization leads to an amazing number of benefits to the organization as sought by shareholders; corporate managers&executive directors (McGee, 2008). Countries with strong corporate governance structures attract funds easily. Firms that guarantee investor rights and have proven corporate governance practices like timely and adequate corporate disclosure and sound board practices attract both domestic and international investors than those which do not. Special attention is targeted towards the effects of corporate governance on firm performance.

The reason is that the performance of a firm can be affected by corporate governance especially in scenarios where there exists a struggle of curiosity flanked by the stockholders and the managementor between the minority and controlling shareholders. Managers are always entrusted with a lot of power as they characterize the welfares of  the board associates and controlling shareholders.The power of controlling shareholders however depends on their capability to manipulate board decisions through majority voting and other ways of expressing opinion. Increase in the voting ratio to cash flow rights increases the distortionary policies (Melissa, 2012).