Types of Corporate Governance

Corporate governance is a area of complexities in ethics, policy and practice that involves many stakeholders. It covers the systems and structures that guarantee accountability, probity and transparency in reporting and operations of a company. It includes the manner in which boards oversee the executive management of a company and the selection, monitoring and evaluation of the CEO’s performance. It also encompasses the manner directors make financial decisions and communicate these to shareholders.

Corporate Governance was a subject of intense debate in the board governance software products in 2022 1990s with the implementation of structural reforms to build markets in former Soviet nations and the Asian financial crisis. The 2002 Enron scandal, then a wave of shareholder activism from the institutional sector and the 2008 financial crisis heightened scrutiny. Corporate governance is still in the spotlight today with new pressures and new innovations constantly appearing.

The dominant school of thought, commonly referred to as the “shareholder primacy” view or Anglo-Saxon approach, places the highest priority on shareholders. Shareholders elect the board of directors which oversees management and sets strategic goals for the company. The board is accountable for identifying and review the CEO, setting and monitoring the enterprise’s risk management policies, directing the operations of the company, and submitting annual reports to shareholders on their management.

Effective corporate governance is based on four pillars that are integrity, transparency, fairness and responsibility. Integrity is the way in the way board members make their decisions. Transparency means openness, honesty and complete disclosure of information to all stakeholders. Fairness is the way boards treat their employees customers, suppliers, and employees. Responsibility is the way a board handles its members and the community at large.