Corporate Governance refers to relations between the management, board of directors, shareholders, and other parties with a stake in the corporation. It also shows the mechanism through which it describes the objectives of the institution, the means to achieve and monitor these goals. Therefore, sound corporate governance provides positive incentives for the board and executive management to accomplish objectives that serve interests of the institution and facilitate the creation of an effective monitoring process, thereby helping the organization to exploit its resources efficiently.
The importance of the corporate governance is based on provision of development and future corporate performance in accordance with a number of principles:
Disclosure and transparency in a manner that allows stakeholders to assess the condition of the institution and its financial performance.
- Equitable treatment of all stakeholders.
- Accountability in relations between the institution and stakeholders.
- Responsibility in terms of a clear separation of responsibilities and delegation of powers between stakeholders.