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The theory of governance

1.7 Purpose and objectives of corporate governance

For the private sector:

 to monitor those parties within a company which control the resources owned by
investors.

 the primary objective of sound corporate governance is improved corporate
performance and accountability in creating long term shareholder value.

For the public and not for profit sectors:

 objectives within these organisations are more complex and conflicting.

 organisations are often appraised according to the "value for money" (VFM) that
they generate.

– defined as performance of an activity to simultaneously achieve economy,
efficiency and effectiveness

The three elements of value for money are:

 Economy = a measure of inputs to achieve a certain service or level of service.

 Effectiveness = a measure of outputs, i.e. services/facilities.

 Efficiency = measure of outputs over inputs.

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