Corporate Governance

Synonyms

Corporate control; Enterprise governance; Organizational governance

Definition

“Corporate governance” describes the processes, structures, and mechanisms that influence the control and direction of corporations. In this context, “control” is about how stakeholders and other agencies external to a corporation control or influence those responsible for directing and managing the affairs of the corporation, and “direction” is about the strategic guidance and management of the corporation.

A broad interpretation of “control and direction” encompasses the roles and influences of governments and regulatory agencies, capital market participants and existing shareholder and debtholders, managerial labor markets, suppliers and customers, community and special interest groups, and internal participants (directors, executive managers, and other employees). Narrow interpretations of “control and direction” tend to focus on influential shareholders, directors, and executive managers.

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