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Chapter 1

1.6 The business case for governance

Providing a business case for governance is important in order to enlist management
support.

Corporate governance is claimed to bring the following benefits:

 strengthening the control structure of a business increases accountability of
management and maximises sustainable wealth creation.

 more attractive to investors – investors believe that better financial performance
is achieved through better management

 the share price might rise – the “governance dividend” – the benefit that
shareholders receive from good corporate governance

 a socially responsible company – "social responsibility dividend" – may be more
attractive to customers and investors hence revenues and share price may rise

6