Corporate governance

Corporate governance—the consideration and evaluation of business and social goals by corporate leaders— addresses the ways in which CORPORATIONs balance the interests of SHAREHOLDERS, workers, and the community. In recent years, although corporate governance has attracted considerable public interest, its concept is poorly defined because it covers a large number of distinct issues. As a result, different people have come up with different definitions that basically reflect their special interests. Some definitions of corporate governance include
• “Corporate governance . . . can be defined narrowly as the relationship of a company to its shareholders or, more broadly, as its relationship to society . . .” (Financial Times, 1997)
• “Corporate governance is about promoting corporate governance fairness, transparency and accountability.” (J. Wolfensohn, President of the World Bank, Financial Times, 21 June 1999)
• “Corporate governance can also be described as the system that controls and directs business corporations. The structure specifies the distribution of rights and responsibilities among different participants in the corporation. Some examples of the participants are the board, managers, shareholders, and other STAKEHOLDERS. Corporate governance spells out the rules and procedures for making decisions on corporate affairs. By doing this, it also provides the structure through which the company directives are set, and means of attaining those objectives and monitoring performance.” (ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT, April 1999).
• As stated in the OECD Principles of Corporate Governance, “Some commentators take too narrow a view, and say it [corporate governance] is the fancy term for the way in which directors and auditors handle their responsibilities towards shareholders. Others use the expression as if it were synonymous with shareholder democracy. Corporate governance is a topic recently conceived, as yet ill-defined, and consequently blurred at the edges . . . corporate governance as a subject, as an objective, or as a regime to be followed for the good of shareholders, customers, bankers and indeed for the reputation and standing of our nation and its economy.”