How Corporate Governance Impacts Investors

by Brian Summers for, November 12th, 2010.

Investor sentiments are a very crucial issue for any company. If the investor confidence is high, the share price of the company soars. If the investor confidence weakens, the value of the stock plummets. Therefore, it is crucial for a company to keep its investors in mind before taking important decisions and to maintain a flawless management quality.

The recent spate of corporate scandals has sent investor confidence plummeting to an all time low. Mismanagement in companies like Enron and World Com left the national exchequer poorer by around $80 billion. As recent studies have shown, companies rated high in good management practices had higher returns than those rated low on the same parameters.

Many investors use their savings, including pension funds, to purchase shares in a company. They are set to lose a lot in case of financial mismanagement by the company. Therefore, the quality of corporate governance is a key issue for them. (continue reading… )



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