Corporate governance is a complicated subject of practice, policy and ethics that involves many stakeholders. It encompasses the structures and systems that ensure transparency, accountability and integrity in business operations and reports. It encompasses the method by which boards oversee the management of the executive team of a business, and how https://boardroomdirect.blog/board-governance-software-products-in-2022/ they select to monitor and evaluate the CEO’s performance. It also includes the manner in which directors make financial decisions and how they inform shareholders of these decisions.
In the 1990s, corporate governance was the subject of much debate due to the implementation of structural reforms aimed at building markets in former Soviet countries and the Asian Financial Crisis. The Enron scandal of 2002, followed by the activism of institutional shareholders, and the 2008 financial crisis raised the level of scrutiny. Corporate governance remains an ongoing topic with new demands and new innovations constantly appearing.
The Anglo-Saxon or “shareholder primary view” places the primary responsibility on shareholders. Shareholders elect a Board of directors that oversees management and sets strategic goals of the company. The board is responsible to select and assess the CEO, establish and monitor enterprise policies for risk management, and oversee the operation of the company. They also provide reports on their stewardship to shareholders.
Integrity as well as transparency, fairness and responsibility are the four core principles of a successful corporate governance. Integrity is a reflection of the ethical and responsible way in which board members make decisions. Transparency refers to transparency honest, integrity, and complete public disclosure of information to all stakeholders. Fairness is about how boards treat employees, suppliers and customers. Responsibility is how the board treats its own members and the entire community.