During this week’s mini-lecture #1, we will be discussing corporate governance, its benefits, as well as the design of a corporate governance system
During this week’s mini-lecture #1, we will be discussing corporate governance, its benefits, as well as the
design of a corporate governance system.
Corporate Governance can be confusing due to the numerous definitions that are out there, however, for our
purposes, we will use the most widely accepted definition which is a term that refers to the rules, processes, or
laws by which businesses are operated, regulated and controlled.
Simply stated, it involves a set of relationships between a company’s leadership, its board of directors, its
shareholders, and other stakeholders. Corporate governance can also provide the structure by which the
mission and vision of the organization are set and the means of attaining that vision.
Corporate Governance includes both social and organizational aspects and encourages a moral as well as ethical
Let’s briefly take a look at some of the benefits of Corporate Governance:
Maintaining moral and ethical corporate governance ensures investors’ confidence, which can make it
easier for an organization to raise capital when needed.
It helps to create buy-in from the managers as well as the employees which are imperative to achieve
the organization’s mission and vision which is in the best interests of both the shareholders and the
It helps to ensure, as best as possible, the organization’s continued success and economic growth.
It helps to make sure that the organization is managed in accordance with its mission and vision
and is in the best interests of all involved.
Let’s also briefly look at the 5 Principles of Corporate Governance:
Board responsibilities must be clearly outlined
We are going to shift gears now and talk about some of the key issues to consider in designing corporate
With many of the world’s emerging economies looking for the right corporate governance system to adopt, the
first key issue to examine is which of the existing governance systems already in place in the
advanced economies of the world is right for them. Which system is more optimal? Which is more efficient?
Another key issue organizations need to consider when designing a corporate governance system is to look at
the choices that they can make in designing governance systems and the impact those choices will have on
executive-level decision-making and the organization’s performance as a whole.
There are several other key issues, however, for purposes of our discussion, we will focus on one more. A final
the key issue we will discuss is that governance is an organizational discipline, meaning simply that organizational
issues such as personal and interpersonal dynamics between employees and leadership, cooperation, and
Larcker, D. F. (2011, September 6). Corporate Governance Matters: Lessons for Practitioners | Business Ethics.
Business Ethics | The Magazine of Corporate Responsibility. Retrieved February 17, 2012, from http://business-
Sun, L. (2011, December 15). Why is Corporate Governance Important?. BusinessDictionary.com. Retrieved
February 17, 2012, from http://www.businessdictionary.com/article/618/
Government Regulation of Business
During this week’s mini-lecture, we will be discussing the rationale for government regulation of
business as well as some of its benefits and costs.
Before we begin I have a question I would like you to think about for a minute. I want to preface this
question by stating that I am not taking a position for or against the regulating of businesses in this
lecture, I am simply stating my opinions along with facts and giving everyone something to think
about. My question to you is…should the government regulate business?
I imagine that most of you would answer "yes" However, if I were to ask you why I imagine you might
have a difficult time giving me an answer that makes sense. Some of you might say it’s to prevent
businesses from misrepresenting themselves or doing something fraudulent. But if you think about it for
a moment, we don’t need the government to regulate for this reason because we already have federal,
state, and local statutes against this type of conduct. Businesses that behave this way are usually dealt
with through civil and criminal legal complaints. Some of you might suggest to me that the government
needs to regulate businesses to protect people from our stock market collapsing. The truth is that there
are far fewer stock market collapses than many of you might think, and many of these so-called stock
market collapses are actually a result of well-meaning but misguided government regulation.
I want you to imagine something with me, just for a moment. Try to imagine a world without any type of
government regulation, but where all of the laws against stealing, fraud, misrepresentation, and violence
against each other still exist. In this hypothetical scenario, what do you think would happen to us if we
did not have the FDA to tell us what was safe to eat and drink or anyone to protect us from unsafe
products? Would we all die? In my personal opinion, the answer is no, we would not. I say this simply
because I believe that our current legal system would more than likely protect us equally, if not more
than we are now.
The regulation of businesses by the government is not a new phenomenon. Simply put, the rationale for
government regulations are to ensure the safety of the public as well as to ensure the success and growth of
As today’s business climate has become more technologically advanced and more global, some say
there is a growing need for more flexibility and less restrictive regulations.
It has been said that government regulations are important for businesses because they ensure best
practices at every level of the organization.
The Government regulates businesses for three main reasons:
Public welfare and safety
Protection from monopolies and unfair business practices
The final part of government regulations I’d like to touch on briefly is the benefits and costs of
Benefits of government regulation of business
Effective government regulations can not only benefit consumers by protecting them from
abusive business practices, they also can benefit the businesses themselves.
They reassure the public, at times, that a particular product or food is safe. Take for example the
recalls in recent years of tainted beef, peanut butter, and cantaloupe. When news of this broke,
sales of these products drastically fell even for producers whose products weren’t even affected
by the contamination.
Government oversight of the environment, safety, health, financial, and other risks of business
the activity can safeguard consumers.
Costs of government regulation of business
For businesses to comply with federal regulations, it has increased their businesses’ expenses
by millions of dollars each year. Some of this cost comes out of businesses’ profits, but most of
these costs are passed down to us, the consumers, in form of higher prices.
It can slow economic growth and hamper job creation.
The regulation requires more resources from a business for the same amount of productivity, which
causes an increase in the cost of production, and an equal increase in the price of the product.
Rahn, R. (2005, August 10). Why do we regulate? Lower Taxes, Less Government, More Freedom.
Retrieved February 21, 2012, from http://www.freedomworks.org/publications
Weekly Related Articles
A Global View of Corporate Governance: One Size Doesn’t Fit All
Government Regulation of Businesses
Does government regulation really kill jobs? Economists say the overall effect minimal.
Regulation of Business – Good or Bad?
President Barack Obama ordered a review of U.S. regulations, both old and new, in a push to blunt criticism
from Republicans and businesses that excessive government is hindering economic growth.
|Academic Level||College (3-4 years: Junior, Senior)|
|Subject Area||Business Studies|
|Number of Pages||2 Page(s)/550 words|