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I had this as a topic to write about, but Deloitte recently put out an article that I think is excellent. Their site seems to have a lot of good information for CFO’s.

In my last post, I walked through the implications of running a company without corporate governance. Assuming good corporate governance is beneficial, this post trims it down to three essential practices. Together, these three practices will improve decision making, while creating clear accountability.  The three suggestions are delegation of authority, budgeting and monthly reports. 

Without corporate governance in place, most companies will eventually go bust. In the interim, shareholder value will slowly (sometimes quickly) erode through waste and a series of suboptimal decisions.

The single hardest obstacle for me as a consultant is getting the management team to buy in to the importance of good corporate governance. I wish I could hang a mirror in from of them that shows what might have been had they done things differently.

My belief is that good corporate governance improves company performance and results in better shareholder returns. Shareholder returns come from cash flows, comprised of inflows and outflows. A lack of corporate governance usually leads to higher than necessary cash outflows through poor capital allocation and general waste.