Corporate governance can
appear to be a waste of time, a necessary evil or something that can guide the strategic
direction of a business. It is something that can be defined in different ways
(depending on your view point) and has been the topic of length debate amongst
law makers, standard setters, academia and best
practice practitioners. Corporate
governance is an activity that is primarily carried out by the board of the
organisation and so any discussion of the topic has to be considered in that
light, so any discussion has to be generalised.
|
Background |
Practical
applications |
1.
“Corporate
governance is the system by which companies are directed and controlled. Boards
of directors are responsible for the governance of their companies. The
shareholders’ role in governance is to appoint the directors and auditors
and to satisfy themselves that an appropriate governance structure is in place.
The responsibilities of the board include setting the company’s strategic
aims, providing the leadership to put them into effect, supervising management
of the business and reporting to shareholders on their stewardship. The
board’s actions are subject to laws, regulations and the shareholders in
general meeting.” Cadbury (1992)
2. “The ways in which a firm
safeguards the interests of its financiers (investors, lenders and
creditors)”.
3.
“The
framework of rules and practices by which a board of directors ensures accountability,
fairness and transparency in the firm’s relationship with all its
stakeholders (financiers, customers, management, employees, government and the
community)”.
4.
“Rules,
processes and behaviour that affect the ways in which power is
exercised….particularly as regards openness, participation,
accountability, effectiveness and coherence” European Governance: A White
Paper (2001).