Understanding Corporate Governance and Board of Directors: A Generic Analysis

This study has taken a simplistic and generic approach towards analyzing the role of board of directors in corporate governance and understanding corporate governance mechanism in this context. The concept of the independency of directors came under discussion in this paper along with the concept of corporate governance which illustrates the concept of independence of board of directors. It has been found that Board of directors play an important role in making smooth functioning and control in organizations. Importance of Board of Directors in Corporate Governance and Responsibilities of Board of Directors also came under discussion in this paper. OECD Principles of Corporate Governance have been included in this paper which is comprehensive in nature. The independence concept of board of directors also came under discussion in this paper and it was argued by Linck, Netter & Yang, (2008) that for internal auditors it is crucial to remain independent for effective results. Determination of the Independence was an important component of this paper which included views and analysis of various researchers for understanding it. The role and significance of Non-Executive Directors was another highlight of this paper. It has been found that the company performance is directly related to the Board Independence and corporate governance should be considered as a system that controls the organizations so that it can provide better and favorable results for organizations. Professionals, individuals and organizations can obtain basic understanding from this paper for modifying and improving their corporate governance system in special consideration of board of directors.