There has been a long debate about whether one can directly attribute improved profitability to improved corporate governance structures and practices. This of course is difficult if not impossible to do in direct absolute terms.
However good corporate governance, done properly, should improve the overall efficiency, effectiveness and performance of a company, which should lead to improved profitability.
Corporate governance is not just a defensive measure to ensure that corporate failures and collapses don’t happen. Equally, says Paul Carragher at Deloitte & Touche, if not more important, is the need to ensure that corporate governance is a positive driver within a company aimed at ensuring improved performance and achievement of business goals and objectives.
So who really benefits?
Who really benefits from good corporate governance practices in a business? Again, provided that corporate governance structures and practices are implemented and embedded within an organisation for the right reasons, in other words with the right spirit and intent, then everybody related to and impacted by a company will benefit from good corporate governance practices in that company.
Shareholders should benefit from increased profitability and enhanced share value. External stakeholders such as customers, suppliers, landlords would benefit from increased and more stable and secure business relationships.
Internal stakeholders such as employees should benefit from more secure and more rewarding careers and working environment, while the society, communities and many others should benefit from an improved contribution by the company towards corporate sustainability matters.
Finally if good corporate governance leads to good companies who contribute to a thriving economy, then the economy, the country, and all its citizens benefit.