Principles of cooperate governance are made to help the policy makers to develop legal regulations and a framework for corporate governance. The principles promote financial stability and sustainable growth which that all stakeholders who include board members, executives, service providers and financial intermediaries work to achieve (OECD, 2015). The laws are applicable both to companies that are publicly traded and those whose shares are privately traded. Good corporate governance is helpful for both the large and small businesses as it leads to economic growth. The principles dictate the running of the company, the goals, and objectives and ways of achieving them. These policies ensure that the management takes care of the needs of employees and all stakeholders so that the company can experience success for a long time. They are dynamic depending on changes in the market and the type of the enterprise.

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Fairness is one factor that governs the policies. The stake holder’s needs should be considered with equality (OECD, 2015). They are the core party of interest of the company and thus should be listened to without taking into account if they are major or minor stakeholders (OECD, 2015). Equity shares in a publicly traded company can be sold, bought, or transferred. The stakeholders include investors, community, employees, executives and public officials. Treating the parties well will ensure that the company withstands the outside pressure. All parties concerned should be allowed to participate in decision making either in person or by a preventative. The stakeholders have a right to be informed of the progress of a company.

Responsibility is another factor guiding the principles of good governance. All concerned parties have a role to play in ensuring the well-being of a company (OECD, 2015). For example, the board of directors’ responsibility is to act on behalf of the company and thus, are responsible for overseeing the welfare of the enterprise. They have the mandate to appoint the chief executive that they trust with the company management. Each employee has the role they play in the industry. The community and investors also have the task of ensuring that the corporation is running in the right way by giving their views and reporting any unusual happenings. The company will grow if everyone takes their role seriously.

Another factor that guides the principles of good governance is transparency. There should be timely disclosure of any information regarding the cooperation (Larcker, & Tayan, 2015). The information to be disclosed includes performance, financial statement, ownership, and management. The presented information should be accurate and aims at informing the stakeholders on how the company is fairing. The information disclosure should happen at least once per year although some countries require companies to issue the report twice a year. It will, therefore, be easy to know when the company is not doing well so that measures can be taken in the case to improve its performance.

The role of the board in accountability is also a factor in governance principle (Larcker, & Tayan, 2015). The board and the executive have a mandate of giving an explanation as to why the company acted in a certain way. It should first determine and discuss the extent of risk that they are willing to take after assessment of the position of the company. The board should then ensure they inform the stakeholders on the progress whether positive or negative.

The principles should promote an effectively cooperate governance framework which will ensure fair and transparent market and efficient resources allocation (Tricker, & Tricker, 2015). The laws should support sound legal, regulatory and institutional framework which is reliable to private operators. The business should ensure that it comply with legislation, self-regulatory arrangement, and regulations which are different from one country to another.

The first group influenced by the policies is the board of directors. The laws dictate that they are responsible for overseeing the management of the company at large and choosing the chief executive. Blame will be on them if the chief executive is under performing as they are the ones who should guide and deploy him if he is not working as he is required. They also have a role in explaining to the stakeholders why the company is underperforming or is making a loss. The employees are also affected by the principles as they are aware of their roles in the enterprise. They also know the rules and regulations which they should follow. Any employee that does not meet the business expectation is likely to be deployed. The community is affected positively as the principles ensure that the firm should have a good relationship with the community. The company should not produce products that are harmful to the community despite the profit that they may get from such a project.

The principles of good governance promote financial stability and sustainable growth which is engineered by all stakeholders which include board members, executives, service providers and financial intermediaries. Fairness is one factor that guides the principles. The treatment of stake holder’s needs should be with equality. Responsibility is another factor guiding the principles of good governance. All stakeholders play a role in ensuring the well-being of a company. Transparency dictates that there should be timely disclosure of any information regarding the cooperation. The board is responsible for accountability to explain why the company acted in a certain way. The effectiveness of a principle is also another factor guiding the principles of good governance. The main groups affected by the laws are the board of governors and the employees as they dictate the expectations from each one of them.