Corporate governance is an area of complex ethics, policy and practice that involves various stakeholders. It covers the systems and structures that guarantee transparency, accountability and probity in the www.boardroomdirect.blog/what-are-the-four-types-of-corporate-governance company’s operations and reporting. It covers the way boards oversee the executive management of a company and the selection, monitoring and evaluation of the CEO’s performances. It also entails the way in which directors make financial decisions and how they inform shareholders of these decisions.
Corporate Governance became a subject of intense debate in the 1990s, due to the introduction of market-building structural reforms in former Soviet nations and the Asian financial crisis. The 2002 Enron scandal, then a wave of institutional shareholder activism and the 2008 financial crisis, heightened scrutiny. Corporate governance remains in the spotlight today with new pressures and new innovations constantly appearing.
The prevailing school of thought, commonly referred to as the „shareholder primacy“ view or Anglo-Saxon approach, places priority on shareholders. Shareholders elect a board of directors that directs management and sets business’s strategic goals. The board is responsible to select and evaluate the CEO, establish and monitor the enterprise policies on risk management and oversee the operation of the company. They also submit reports on their management to shareholders.
Integrity as well as transparency, fairness and accountability are the four main principles of effective corporate governance. Integrity is a reflection of the ethical and responsible way board members make decisions. Transparency is about openness and honesty as well as complete disclosure of information to all stakeholders. Fairness is a factor in how boards treat their employees customers, suppliers, and employees. The responsibility of the board treats its own members as well as the community in general.