Frequently Asked Questions

What is the primary aim of a corporation in terms of corporate governance?

The primary aim of a corporation in terms of corporate governance is to balance social goals and economic well-being. This involves operating within the parameters established by state law and various regulations, adhering to principles of integrity, responsibility, fairness, accountability, and transparency. The corporation's goal is to foster efficient consumption of resources and ensure their ethical distribution. This involves placing equal interest between society, corporations, and individuals, and operating the company in an equal and just manner. In addition to this, corporations aim to generate profit and distribute these profits to shareholders. They also strive to attract necessary capital by issuing stock to raise quick cash. Corporate governance provides a structure for determining the goals of a company, including the methods of achieving these objectives and monitoring performance. It also establishes boundaries within which companies can set their goals. The World Bank defines corporate governance as a mix of regulations and laws that require voluntary practices from the private sector. This allows corporations to attract employees and raise capital from investors, operate efficiently under governance guidelines, and generate long-term value. Corporations are also expected to respect the rights of society and shareholders.