Cyclical View of the Relationship Between Corporate Governance and Strategic Management

In: Business and Management

Submitted By sayedfahmy
Words 999
Pages 4
Assignment 1
ESLSCA Business School MBA Program
Strategic Management
Prof. Saneya EL Galaly Prepared by: Sayed Fahmy EL-Sayed Class No : 49-3rd A

A cyclical view of the relationship between corporate Governance and strategic management
The function of corporate governance is generally performed by the boards of directors within the firms. The boards always have power to hire and fire top managers and to ratify and monitor important decisions. In addition, they can influence strategic decisions by aligning interests of shareholders and top managers through executive compensation
Researches has found that corporate governance mechanisms such as the boards of directors and executive compensation affect strategic decisions that benefit themselves at the expenses of shareholders when there is lack of effective corporate governance.
As show in the figure it is a new proposal of a cyclical model in the relation between corporate governance and strategic decision, highlighting that strategic decisions can also affect corporate governance through shaping firm ownership structure. Discussing the impacts of strategic decisions on firm ownership structure and corporate governance. Suggesting that the relationship between strategic management and corporate governance is a cyclical and ownership structure plays a central role in understanding how strategic management affects corporate governance.
Literature review (Summary)

Corporate governance results from the separation of decision making and risk-bearing functions at modern corporations to ensure that managers do not make decisions that further their personal interests at the expenses of shareholders, and monitor the decisions initiated and implemented by managers. * Managers, as decision makers at these corporations do not bear the substantial wealth effects of their decisions.

* Owners, as risk…...

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