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Corporate governance encompasses a set of policies, processes, and practices that guide an organization in establishing accountability, transparency, and ethical behavior towards its stakeholders. These principles foster trust and enhance overall organizational integrity.

Improved organizational transparency is a direct benefit of effective corporate governance. By establishing clear reporting and communication practices, stakeholders gain insight into decision-making processes, which builds trust and fosters better relationships.

Enhanced stakeholder trust is also a fundamental benefit, as good corporate governance practices create a framework where stakeholders feel valued and more confident in their interactions with the organization. When stakeholders see that an organization is committed to ethical practices and transparency, their trust and loyalty tend to deepen.

Accountability of senior management is critical to corporate governance, as it ensures that those in leadership positions are held responsible for their actions and decisions. This accountability mechanism strengthens the decision-making process and aligns management strategies with stakeholder interests, further enhancing governance practices.

While corporate governance can potentially lead to cost efficiencies over time through better oversight and management practices, a direct and immediate reduction in operational costs is not typically considered a core benefit. Therefore, the option regarding the reduction of operational costs does not align with the primary advantages provided by effective corporate governance practices.