The objective of any commercial organization is to make money. One of the benefits of the implementation of sound corporate governance practices and an effective compliance function is keeping that money. Commercial entities operate in highly complex and at times hostile operating environments. Putting an appropriately sized control infrastructure in place increases the likelihood of keeping hard earned profits.
Studies have shown the companies that make investments into good corporate governance and practices produce substantially better operational and market results. Benefits from the implementation of good corporate governance include, improved top level decision-making processes, better control environments and a reduction in firms’ cost of capital
Other benefits to good corporate governance include:
- An institutionalization process, with less dependence on specific people to run the business
- Higher investor community confidence
- Better access to credit terms, including long-term capital from development banks
- More recognition from stakeholders, both internal and external stakeholders, including national and international institutions.
- Greater confidence in carrying out mergers and acquisitions because of increased standards of transparency
- Substantial improvement of business processes, including internal controls and supervision of the decision-making process
A growing body of empirical evidence shows that well-governed companies receive higher market valuations. Such firms are perceived as investor-friendly, and this gives investors confidence that their investment will generate returns without violating shareholder rights.1
The evidence is clear, the investment into good corporate governance and a compliance function will result in higher valuations and lower cost of capital. Make the investment today. MRB will get you there.
1 Practical Guide to Corporate Governance. InternationalFinance Corporation, Organisation for Economic Co-operation and Development and the Global Corporate Governance Forum – 2009