Page 1 of 11

European Journal of Business &

Social Sciences

Available at https://ejbss.org/

ISSN: 2235-767X

Volume 07 Issue 01

January 2019

Available online: https://ejbss.org/ P a g e | 345

Impact of Corporate Governance on the

Performance of an Organisation

Bharti Panchal

Designation : student

Ugc Net qualified : July 2018

ABSTRACT

Corporate governance is needed to manage and control an organization.

The performance of an organization tends to improve due to corporate

governance as the functioning of an organization can be well managed and

controlled with the help of corporate governance. Under corporate

governance, an organization has to follow some rules and regulations in

order to maintain the controlling process of that financial institute.

It is observed that due to corporate governance, the number of investors in

the organization tends to increase resulting into the improvement in the

financial status of the institute. The current paper highlights the impact of

corporate governance on the performance of an organization

KEYWORDS:

Corporate Governance, Financial, Organization

INTRODUCTION

Page 2 of 11

European Journal of Business &

Social Sciences

Available at https://ejbss.org/

ISSN: 2235-767X

Volume 07 Issue 01

January 2019

Available online: https://ejbss.org/ P a g e | 346

After the liberalization, corporate governance was introduced in Indian

financial sector for better management of the financial organization. To

avoid the frauds in the financial bodies, a number of corporate laws were

imposed on the financial authorities so that the functioning of these

organizations can be directed in accordance with the specified rules and

regulations.

Corporate governance plays an important role in better performance of

the organization. Due to increased number of investors as a result of

corporate governance, the market value of the organization tends to raise

because more and more investors show their interest in buying the

shares of that organization which consequently improves the

performance of that organization.

Any kind of financial scam can be avoided with the help of corporate

governance. Additionally, if any scam is observed in the organization

then it is investigated by the corporate governance body and on finding

the guilty of any financial fraud, the organization is ordered to give all the

investing money back to the investors so that there should be no damage

to the welfare of investors. This policy really encourages the investors

and they prefer investing in the organization; thereby; enhancing the

financial performance of the organization.

Page 3 of 11

European Journal of Business &

Social Sciences

Available at https://ejbss.org/

ISSN: 2235-767X

Volume 07 Issue 01

January 2019

Available online: https://ejbss.org/ P a g e | 347

Due to all these factors, the growth of the organization is improved and

investors start showing more faith in the organization. Hence, an

excellent goodwill of the organization is built in the financial sector and

that organization gets the capability to compete with other financial

institutes.

Due to managed and directed working of the organization, the efficiency

of the organization also tends to improve as the performance of the

employees of that financial body tends to increase. It is reported that an

effective growth is observed in most of the financial institutes after the

implementation of corporate governance in Indian financial sector.

There are a number of public and public firms which work properly

under the guidance of corporate laws and these institutes are showing

better results as compared to that were shown before the implementation

of the corporate governance. Hence, it can be said that the role of

corporate governance is significant in the overall performance of an

organization.

A culture of accountability is established under the corporate governance

and the upper authorities of an organization have to take the

responsibility of any scam or financial fraud done in the organization.

This procedure certainly motivates the common investors and a sense of