CORPORATE GOVERNANCE MAKES COMPANY PERFORM BETTER, DOESN`T IT?

The need for corporate governance comes from separation of powers between ownership and control in large corporations which are built on each other to protect investors` rights by reducing managerial discretion over business decisions. Business flourishment is a basis for countries` proper development in terms of capitalism providing that such prosperity is based on a rational legal system. Affluent nations who were able to form strong institutions to protect property rights and enforce contracts are far too ahead of developing countries that fail to set up such legal instruments to eliminate loopholes in their systems thus not being able to enjoy world market opportunities. The legal systems of the nations, especially those courts who implement law and order among the persons, are said to play an important role in availing or restricting business activities. In the formation of good corporate governance in the developed world, historically common law and civil law practices had a lot to say. This article will discover some peculiarities of both systems.

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