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Corporate governance

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA BT – FIA FBT › Corporate governance

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by Ken Garrett.
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  • January 19, 2022 at 12:56 pm #647021
    AbrahamChinYuan
    Participant
    • Topics: 20
    • Replies: 19
    • ☆

    Hi, I read this sentence “Corporate governance is important in all but the smallest organization” in textbook. May I know does this means Corporate governance is important including the smallest organization?

    January 19, 2022 at 7:56 pm #647055
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10197
    • ☆☆☆☆☆

    It means that in very small organisations there is not usually a governance problem because the owners are also the directors/managers.

    When organisations grow and owners and directors are not the same people then governance problems arise because the directors might act in their own best interests rather than in the best interests of the owners.

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