Corporate governance - Financial definition
Concise definition of the term corporate governance
Corporate governance refers to the system of rules, practices, and processes by which a company is directed and controlled to ensure transparency, accountability, and ethical behavior.
Comprehensive definition of the term corporate governance
Corporate governance encompasses the mechanisms, relationships, and institutions through which corporate objectives are set, pursued, and monitored. It includes the distribution of rights and responsibilities among different stakeholders, such as shareholders, management, board of directors, regulators, and other relevant parties.
Effective corporate governance promotes integrity, fairness, and efficiency in decision-making processes, reduces the risk of conflicts of interest, enhances investor confidence, and ultimately contributes to the long-term success and sustainability of companies. Practical examples of corporate governance practices include establishing independent boards of directors, adopting codes of conduct and ethics, implementing internal controls and risk management systems, conducting regular audits and evaluations, and ensuring transparency and disclosure of financial information to shareholders and the public.
In today's globalized and interconnected business environment, corporate governance has become increasingly important in fostering trust and maintaining the integrity of financial markets worldwide.