Corporate Governance

In its essence, corporate governance refers to the organization of the relationships between shareholders, [Page 472]board of directors, management, and other stakeholders in a corporation. According to the Cadbury Committee, corporate governance is concerned with the processes by which corporations are directed and controlled. Corporate governance especially deals with exercise of authority over the directions of the company, the supervision of actions of top management, the acceptance of accountability, and the compliance with legal and regulatory frameworks in which the company operates. The term corporate governance is not easy to define, as it can be used differently in different contexts. Several academic disciplines that study corporate governance bring their own distinctive meaning of the term. For example, economic theory emphasizes the mechanisms used by financial ...