IS COST CONTROL THE ULTIMATE MOTIVE BEHIND CORPORATE GOVERNANCE? - AN ANALYSIS OF THE UNDERLYING RELATIONSHIPS

The key objective of this study is analyze the underlying relationships between cost control and corporate governance in an attempt to determine whether or not cost control is the ultimate motive behind corporate governance in an organizational context. It also analyses why it is important to uphold the shareholders' interests by a corporation and at the same time to minimize the costs that usually occur in that corporation. Our conceptual analysis supports the notion that corporate governance must help retain the best interests of all the internal and external stakeholders and safeguard organizational resources from misuse, abuse, or practice of self-interests of the managers. It also supports that since protecting an organization’s interest requires protecting the interests of all stakeholders, cost control by that organization should be well guided by the corporate governance principles in ways that provide strongest safeguard of interests of all those stakeholders. Thus, a sound corporate governance policy requires adopting the standards and mechanisms that would maximize stakeholders’ financial and non-financial interests and at the same time minimize the operational costs in an organizational environment. This study concludes that cost control and corporate governance must operate in pragmatic ways in order to improve efficiency and foster capabilities of the organization and to protect simultaneously the interests of all the stakeholders.