What is meant by corporate governance?

Question

What will be an ideal response?

Answer 1

Corporate governance may be defined as the system by which business corporations are directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in a corporation-such as the board, managers, shareholders and other stakeholders-and spells out the rules and procedures for making decisions on corporate affairs. By doing this, it also provides the structure through which the company objectives are set and the means of attaining those objectives and monitoring performance. Governance rules and regulations differ among countries and regions around the world. For example, the U.K. and U.S. systems have been termed outsider systems because of dispersed ownership of corporate equity among a large number of outside investors. In contrast, in an insider system, such as that in many continental European countries, ownership tends to be much more concentrated, with shares often being owned by holding companies, families, or banks.