Does the corporate governance maximize shareholders wealth Essay

Does the corporate governance maximize shareholders wealth - Essay Example Shareholders are interested to know if the risk they took in investing in the company provided returns that increase the wealth not only of the company but also of the shareholders as well. II. Critical evaluation of corporate governance of a selected company Leeds Group’s trading operations are conducted by Hemmers-Itex Textil Import Export GmbH. Hemmers is based in Nordhorn, Germany and has a Chinese subsidiary based in Shanghai. Together these companies employ some 120 people and achieved fabric sales of 13.1 million linear metres in the year ended 30 September 2009 (Leeds Group 2012). Inferring from the annual report of Leeds PLC, it can be said that the company is conservative in applying its cost. Conservative in applying cost meant providing generous allowance for expense to have a more accurate and realistic cost of the company. In fact, Leeds PLC may be one of few companies who are â€Å"honest enough† to reflect a s of  £454,000 in the fiscal year 2012 (Leeds Group PLC 2012) that would be seen by its shareholders. It is tough for the company to reflect a loss on annual report because it may not sit well with the shareholders who might withdraw their investments in the company and leave the company broke affecting not only its liquidity but also its financial position. ... The classical approach to organisational effectiveness was mainly from a managerial viewpoint. Further, classical organisational effectiveness postulated that hard and efficient labour would ultimately reap rewards for management and employees, by increasing the performance outcomes of the organisation. Thus, by raising the productivity, higher profits would be accrued, which in turn would give rise to higher pay, and consequently improved worker satisfaction (Etzioni, 1964). Today’s concepts of effective organisations and management are related to past perspectives (Baker and Branch, 2002). The contemporary globalisation of business profoundly increases the level of competition in most industries. For example, Singapore aspires to lead the biotech industry, Korea’s Samsung and LG have become established worldwide as reputed brands, while Malaysia is a leader in chip manufacturing. â€Å"These new competitors have advantages that range from geography to high-skill, rel atively low-wage workforces† (Lawler and Worley, 2011, p.4). The greatest changes in the recent decades relate to rapid developments in technology and telecommunications including the Internet, satellite TV, and cell phones linking most parts of the world, creating new business opportunities (Lawler and Worley, 2011). Significantly, the classical school developed universal principles applicable to all organisations in all situations. â€Å"The classical theorists conceived of organisations as mechanical devices to achieve oranisational goals and objectives† (Alajloni et al., 2010, p.60). Although classical organisational effectiveness has sustained through several changes in organisational management