Analysis of the Correlation between Corporate Governance and the Economic-Financial Performance of the Economic Entities

Raluca Florentina Cretu
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Raluca Florentina Cretu: University of Economic Studies, Faculty of Accounting and Management Information Systems, Department of Financial and Economic Analysis, Bucharest, Romania

Journal of International Business Research and Marketing, 2020, vol. 6, issue 1, 17-23

Abstract: Performance is a combination of efficiency and effectiveness. If efficiency is to achieve maximum effects with minimal effort, effectiveness is the quantification of the extent to which the objectives are met. The new economic configuration of commercial transactions, characterized by change and unpredictability, leads to a shift from a reactive approach, based on previous planning and subsequent control, to a dynamic, proactive, characterized by the quantification-action-reaction. The quantification of the performance of the economic entity is carried out with the help of the indicators. The indicator thus becoming a decision support tool that verifies whether the actions taken are registered in the direction approved by the General Meeting of Shareholders and the Board of Directors. Therefore, quantification of performance involves identifying a methodology in which the following components appear as the main directions of action: customers, shareholders, business partners, own staff, various interested audiences, widening the company’s responsibility to groups other than shareholders, managers, employees and trade unions, internal processes, quality system, information system. In this paper I propose to analyze the correlation between corporate governance and the performance of economic entities, known to be the fact that economic agents with poor corporate governance have low economic performance (low yield of assets, equity and investments, etc), expose themselves more often the risks (eg stock price volatility of BSE listed companies, low interest rate, etc.). I believe that it is necessary to create a new global governance model that takes into account the organizational and evolving dimension of the entity, but also other partners whose actions can maximize the efficiency, performance or value of the brand, and which puts particular emphasis on creating value or wealth for stakeholders. We need a new policy to maximize shareholders’ wealth.

Keywords: Performance; Indicators; Corporate Governance; Quantification; Well-Being (search for similar items in EconPapers)
JEL-codes: M00 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:mgs:jibrme:v:6:y:2020:i:1:p:17-23

DOI: 10.18775/jibrm.1849-8558.2015.61.3003

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