Corporate Governance

Definition

Corporate Governance is an oversight system to guide management decisions toward maximizing the investment of shareholder funds. Ongoing discussion of CSR has broadened the meaning of corporate governance to encompass the balance between shareholders and stakeholders interest, and this has become a core topic.

In a limited sense, corporate governance is a business management system that aims to enhance shareholder value. Corporate governance refers to a system or a rule by which a shareholder-elected director participates in management decision-making, enforces application of management directives, and the activities of the directors are monitored to ensure alignment with the company's intentions and comply with company rules.

The OECD's "Corporate Governance Principles" *1 includes balancing the interests of shareholders and stakeholders in its definition of corporate governance as "a key element in improving economic efficiency and growth as well as enhancing investor confidence and the relationships between a company's management, its board, its shareholders and other stakeholders". Much discussing is addressing the topic of "who owns a corporation", and "how should a corporation be governed".