Strong corporate governance enhances investor confidence and reduces the risk of fraud or mismanagement. Companies with robust governance structures tend to have better financial performance and are more likely to attract long-term investors. Conversely, weak governance can lead to ethical lapses, conflicts of interest, and poor decision-making, which can erode shareholder value. Investors prioritize companies with independent boards, effective risk management, and clear policies, recognizing that sound corporate governance is essential for sustainable investment growth.