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JPMorgan chase as a business accomplished lot in the market. However, the organization has not performed so well in the governance system that protects shareholders’ interests. Thus, JPMorgan Chase is not able to safeguard the interests of its shareholders due to the problems facing the company as a result of the poor decisions made by Executives and poor performance of some of the company’s employees. By encountering Various legal bills and fines as well as making losses has made the company lose the opportunity to make higher profits (Hearit, 2018). Therefore, the company is unable to control and monitor as well as decide on top managerial decisions therefore cannot satisfy and align the interests of its shareholders. For instance, the board made wrong decisions in choosing on what risks the company would take and in return their poor governance in governing, choosing and recompensing the firm’s CEO as its premeditated leader made this firm and particularly the shareholders to suffer loses. Additionally, the firm did not protect the shareholder’s interests through excessive risk taking by ignoring the governance system and taking high risks to get high returns. Moreover, the reduced share price by being greed for high returns that led to scams and affected the stake price which is a cost to stakeholders. Lastly, by using the investors’ money to take risks can be regarded as gambling and therefore did not safeguard the shareholders’ benefits (Bebchuk, 2020).
In this Context I would recommend the governance devices such as JPMorgan Chase analyzing current risks that are involved in the management business, shareholders and stake holders therefore, setting up policies that will govern the business after analyzing the corporate risks. This would help the business in avoiding making bad decisions in the future and escape the bills and legal fines they already paid. Additionally, the business should implement the laid-out recommendations and communicating to the employees such that they respect and abide by the code of conduct to avoid making mistakes that will cost the business. This is achieved by training employees on the relevance of abiding by the code of conduct. moreover, I would classify the governance device as a tool to determine the fraudulent cases thus avoiding them (Bebchuk, 2020).
In helping, implementing of selecting any good governance device will assist the business in maximizing profits and reducing loses. Therefore, framing and communication are the positive tools contributing and assisting in a business to develop firm good governance strategies. However, hindrance would grow due to poor implementation plans and deprived communication from the management team to employees and stakeholders (Bebchuk, 2020).
To improve the govern system in JPMorgan Chase, the business should lay out objectives and goals thus these factors will drive the company to achieve in developing a valid governance system. Furthermore, after laying the governance system, the company should create awareness therefore, communicating the set goals and objectives to employees, stake holders and shareholders. It’s the obligation of the business to encourage the parties involved and drive them to achieve these goals. Additionally, the business should monitor a perfect audit system and develop a proactive audit team to achieve a good governance system. Moreover, the managerial team should effectively monitor the laid-out precautions put in place and predict events to protect the business against bankruptcy. Lastly, a code of behavior should be shown regularly to the working personnel, ensuring they recognize terms and conditions laid in place and thus strictly following them (Hearit, 2018).
Bebchuk, L. A. (2020). The Illuory Promise of Stakeholder Governance. Cornell Law Reveiw, 1-81.
Hearit, L. B. (2018). JPMorgan Chase, Bank of America, Wells Fargo,and the Financial Crisis of 2008. International Journal of Business Information, 1-18.