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Corporate Governance

The purpose of corporate governance is to improve firms’ performance and maximize shareholders’ value by monitoring the actions of management when agency risks are introduced with the transfer of ownership from the shareholders to management.

Definitions of Corporate Governance

Corporate governance is defined as a system of procedures, practices, policies, mechanisms, and institutions to direct and control the corporation. There are two different views about corporate governance: a narrow view and a broad view. The narrow view of corporate governance refers to an institutional arrangement to define and configure the rights and responsibilities between the shareholders and management to ensure the maximization of shareholders’ value. The broad view of corporate governance refers to a broad set of governance structures specifying the distribution of rights and responsibilities among ...

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