Types of Corporate Governance

Corporate governance is a complicated area of practice, policy and ethics that involves a variety of stakeholders. It encapsulates the systems and structures which ensure accountability, transparency and integrity in company operations and reports. It includes the manner in which boards supervise the executives of a business and the selection, monitoring and evaluation of the CEO’s performance. It also covers the manner in which directors make financial decisions and how they communicate these decisions to shareholders.

Corporate Governance became a subject of intense debate in the 1990s, as a result of structural reforms that helped build markets in former Soviet countries as well as the Asian financial crisis. The Enron scandal in 2002, followed by institutional shareholder activism, and the financial crisis of 2008 has led to increased scrutiny. Corporate governance is a hot issue today, with new innovations and pressures constantly surfacing.

The Anglo-Saxon or “shareholder primary view” puts the emphasis on shareholders. Shareholders elect the board of directors, which directs management and sets strategic aims for the company. The board is responsible for deciding on and evaluating the CEO, establishing and evaluating enterprise risk management policies, overseeing the operations of the company, and submitting annual reports to shareholders on their stewardship.

Integrity, transparency, fairness, and accountability are the four main principles of a successful corporate governance. Integrity refers to the ethical and responsible way in which board members make decisions. Transparency refers to transparency and honesty as well as the full disclosure of all information to all stakeholders. Fairness is the way boards treat their www.boardroomdirect.blog employees customers, suppliers, and employees. Responsibility is how a board deals with its members and the entire community.

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