KPMG Jordan detained a lecture for the capital bank of Iraq under the title of corporate governance .
On May 19, 2016, KPMG Jordan detained a lecture for the capital bank of Iraq under the title of corporate governance and its benefits as briefed below:
Corporate Governance Definition:
The system and processes by which entities are directed and controlled to enhance performance and long-term stakeholder value. It encompasses both accountability to shareholders and responsibility to stakeholders.
Benefits of corporate governance:
● Helping to survive in an increasingly competitive environment through mergers, acquisitions, partnerships, and risk reduction through asset diversification.
● Providing an exit policy and ensure a smooth inter-generational transfer of wealth and divestment of family assets, as well as reducing the chance for conflicts of interest to arise.
● Adopting good corporate governance practices leading to better internal control systems, greater accountability, and better profit margins.
● Paving the way for possible future growth, diversification, or a sale, including the ability to attract equity investors – from Jordan and abroad – as well as reduce the cost of credit.
● Reducing the costs of elevating investor’s confidence. Organizations seeking new funds often find themselves obliged to undertake serious corporate governance reforms at a high cost and upon the demand of outsiders, often in a time of crisis. When the foundations are already in place investors and potential partners will have more confidence in investing in or expanding the company’s operations.
● Managing risks as in the event of the appearance of risk and/or crises, they will be managed in a timely manner and/or avoided, therefore minimizing damage and costs.
Benefits to Shareholders:
●Good corporate governance can provide proper incentives for the Board and management to pursue objectives that are in the interest of the company and shareholders, as well as facilitate effective monitoring.
● Better corporate governance can also provide Shareholders with greater security on their investment.
● Better corporate governance also ensures that shareholders are sufficiently informed on decisions concerning fundamental issues like amendments of statutes or articles of incorporation, sale of assets, etc.
Benefits to the Economy:
● It was found out that more than 84% of the global institutional investors are willing to pay a premium for the shares of a well-governed company over one considered poorly governed but with a comparable financial record.
● The adoption of corporate governance principles can play a significant role in increasing the corporate value of a company.