**8. External corporate governance controls**

Sreeti [21] posits that external CG controls involve the exercise of external stakeholders controls over the affairs of an organization. It includes:


#### **9. Merit of corporate governance**

Palia and Lichtenberg [22]; Black et al. [23], note the followings as benefits inherent in the rightful application of CG;


iv.Effectively minimizes wastages, corruption, risks and mismanagement.

Gompers et al. [24] maintain that good CG increases valuations and boost the profitability of the organization. Claessen et al. [25] note that better organizations frameworks benefit organizations through greater access to financing, lower cost of capital, better performance and more favorable treatment of all stakeholders. Donaldson [26] posits that good CG is important for increasing investor confidence and market liquidity. Frost et al. [27] state that improvements in CG practices ensure better disclosures in business reporting.

#### **10. Stewardship theory perspective to corporate governance**

The etymology of the stewardship theory is anchored in the field of psychology and sociology and its connotation according to Davis et al. [28] posits the protection and maximization of shareholders wealth via organization performance; this optimizes the steward's utility functions. In this analogy, stewards are organizations' management working for the interest of the shareholders. They secure and enhance profits for shareholders. Unlike the agency theory, the stewardship theory does not emphasize the view of individualism [29], but instead on the function of top executives as stewards, amalgamating their interest and goals with the organization. The stewardship view advocates that stewards are motivated and satisfied when organizational goals are attained.

Agyris [30] posits that the agency theory looks at an employee or people as an economic being, which suppresses an individual's ambitions. However, stewardship theory views the relevance of structures that equips the steward and offers optimal autonomy anchored on trust [29]. It emphasis the stature of employees or management to function autonomously, so that returns are maximized for the shareholders'. Hence, minimizing the costs focused on controlling and monitoring behaviors [28]. The stewardship concept suggests that a successful organization (not individual success) leads to happiness and hence motivate stewards [31].

*Corporate Governance: The Sustainability Quest DOI: http://dx.doi.org/10.5772/intechopen.99306*

**Figure 1.** *The stewardship model. Source: [31].*

Alternatively, Daly et al. [32] argue that to protect their reputations as decisionmakers in organizations, management and directors need to optimally lead the organization to optimize non-financial and financial performance. Hence, Fama [33] posits that management and directors are likewise managing their jobs to be perceived as effective and result-oriented stewards of their organization, while, Shleifer and Vishny [34] insist that management return revenue to investors to foster a good reputation so they can re-enter the market for future finance. Peggy and Hugh [35] argue that unlike agency theory, stewardship theory helps in aligning the goals of managers and shareholders. When managers and shareholders' goals are aligned, organization performance is expected to increase as there is no conflict of self-interest (**Figure 1**).

#### **11. Conclusion and prospect of corporate governance**

An organizations' operations has impact that transcends the physical boundaries of their functioning, with influence on diverse issues of their environment (i.e. political, economic, legal, socio-cultural, etc.) which makes the role of their governance structural practices much strategic, and reinforces the need for sustainability. Today's CG structure and practice are constantly been scrutinized by diverse stakeholders as the easy resort to ethical, speedy, and sustainable enforcement of responsible corporate practices; this is necessitated by the negligence and slow pace of enacting legislative reform on such issues. Hence, CG when utilized as a tool possesses the capability to advance sustainable initiatives and engagement.

In prospecting it potency, the harnessing of this tool (i.e. corporate governance) demands a clear understanding of its potentials (i.e. concept of corporate governance, essence of corporate governance, scope of corporate governance, principles of corporate governance, internal corporate governance controls, external corporate governance controls, merit of corporate governance, and stewardship theory perspective to corporate governance, etc.). A key factor in this harnessing is the activity of stakeholders; corporation accountability must transcend beyond their shareholder to incorporate the stakeholders, and an effective framework should be streamlined to optimize the interactions of such engagement. Also, the GC actors of tomorrow must understand and have an experimental knowledge of their environment and the core of sustainability (i.e. today's action in exploring opportunity must not hinder the future availability and exploration of opportunities).

CG impacts the optimality of performance at the organizational and national level. Having explored the labyrinth of CG with a focus on the concept of CG, the essence of CG, the scope of CG, principles of CG, internal CG controls, external CG controls, the merit of CG, and stewardship theory perspective to CG, it is the author's opinion that CG plays a quintessential role in furthering the posterity and optimal sustainability of an organization's objectives as well as a nations' relevance at the global scene. Nonetheless, there is a need for optimizing the execution of CG practices via optimizing the flow of information, benchmarking best practices and standards, sustained commitment of all relevant stakeholders, and rewarding incentives to practitioners of CG practices.

The future of CG lies in their relevance today, and their ability to adapt to changing times as well as cover legal loopholes that undermine their potency. The practicality of that relevance for CG practices is strengthened in the involvement of relevant stakeholders in the formulation, enactment, and execution of such practices. Although the structuring, operating and controlling of an organization or nations' interest is not possible without the involvement of CG practices, CG practices can not be viable without the participation of relevant key stakeholders. The value of CG practices in today's organizations will continue to evolve as organizations are becoming agents of social re-engineers and not just economic transformers.
