The definition, role, and value of corporate governance explained. Read On!
The term "corporate governance" refers to the system of rules and practices that a company uses to oversee its operations. Corporate governance includes the processes and procedures that ensure the company is run ethically and in the best interests of its shareholders. It also encompasses the systems used to make sure all stakeholders, including customers, suppliers, and the community are considered when making decisions. Good corporate governance is important because it can help a company maintain financial stability, protect shareholder value, and build trust with investors.
The concept of corporate governance is founded on the belief that there are certain fundamental principles which should be adhered to in order to protect the interests of all stakeholders in a company. These include, but are not limited to, the recognition and protection of shareholders, directors being held accountable to act in the best interests of their shareholders, and maintaining transparency and ethical standards.
Corporate governance is important to the functioning of a company. When it is ignored, bad things can happen as exemplified by companies whose board members attempted to avoid responsibility as the company plunged into failure. Corporate governance includes the processes and structures that ensure that a company is run effectively and in compliance with laws and regulations.
A well-functioning corporate governance framework is essential for promoting investor confidence and sustainable economic growth. It sets out the rules by which a company is run, establishes accountability and helps to ensure that companies are transparent and operate with integrity.
Why should a CIO care about corporate governance? IT Governance actually comes under the purview of corporate governance, is the responsibility of the Board, and should more appropriately be called โCorporate Governance of IT.โ Additionally, CIOs can learn and apply a lot from corporate governance to the governance of IT. Therefore, CIOs must have mastery over corporate governance.
We refer you to an in-depth discussion on Corporate Governance. CIOs can learn the diverse ways in which it is implemented in corporations across the world.
This primer on corporate governance discusses the role and importance of corporate governance from the perspective of organizational performance. It examines the different approaches to corporate governance and contends that the form of governance in an organization is determined by the approach it takes.
This overview of corporate governance will help you understand:
- What is corporate governance?
- What is the structure of corporate governance?
- What are the principles of corporate governance?
- What are the theories underlying corporate governance?
- How to select the right corporate governance system for your organization?
This discussion is a general discussion on corporate governance and provides an excellent introduction that can be built upon to create an effective governance capability.
