corporate governance

  

Definition

The framework of rules and practices by which a board of directors ensures accountability, fairness, and transparency in a company's relationship with its all stakeholders (financiers, customers, management, employees, government, and the community).

The corporate governance framework consists of (1) explicit and implicit contracts between the company and the stakeholders for distribution of responsibilities, rights, and rewards, (2) procedures for reconciling the sometimes conflicting interests of stakeholders in accordance with their duties, privileges, and roles, and (3) procedures for proper supervision, control, and information-flows to serve as a system of checks-and-balances. Also called corporation governance. See also Cadbury rules and governance.


Use this term in a sentence

  • The board of directors exerts corporate governance over all employees of the company, including the CEO, and can fire any of them at any time.

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  • You need to make sure that your business adheres to all the rules of the corporate governance so that everything is legit.

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  • Corporate governance broadly refers to the mechanisms, relations, and processes by which a corperation is controlled and is directed; involves balancing the many interests of the stakeholders of a corporation.

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