Corporate governance is an area of complex policy, ethics and practice that involves various stakeholders. It covers the structures and systems that ensure transparency, accountability and transparency in the company’s operations and reports. It includes the way in which boards supervise the executive management of a company and how they choose to monitor and evaluate the CEO’s performance. It also includes the method by which directors make financial choices and how they communicate their decisions to shareholders.
Corporate Governance became the subject of intense debate in the 1990s, due to the introduction of market-building structural reforms in former Soviet states and the Asian financial crisis. The 2002 Enron incident, then a wave of shareholder activism in the form of institutional shareholders and the 2008 financial crisis, heightened scrutiny. Corporate governance is a hot issue today, with new developments and challenges constantly emerging.
The prevailing school of thought, known as the “shareholder primacy” view or Anglo-Saxon method, places a higher priority on shareholders. Shareholders choose the board of directors who direct management and sets strategic goals for the company. The board is responsible for choosing and evaluating the CEO, establishing and monitoring the company’s risk management policies, supervising the company’s operations and submitting reports to shareholders regarding their stewardship.
Effective corporate governance is based on four principles such as integrity, transparency fairness and responsibility. Integrity is how in the way board members make their decisions. Transparency means openness and honesty as well as the complete disclosure of important information to all stakeholders. Fairness is the way boards www.boardroomdirect.blog/real-estate-data-room-and-its-functionality/ deal with employees, suppliers and clients. The responsibility of a board behaves towards its own members as well as the community at large.