» Corporate Governance

Corporate Governance

Corporate governance refers to the manner in which a company is run. Corporate governance deals with policies, laws, customs, processes and institutions that affect how a company is controlled or directed. An important focus of corporate governance is the accountability of leaders in the organization the need to keep their actions above board.

In addition to leadership accountability, other issues in corporate governance are stakeholder relationships and the goals of the corporation. For most corporations, the main external players are shareholders, debtors, creditors, suppliers, customers and the community(ies) in which the corporation does business. Internal players are the members of the board of directors, the executives and workers.

Interest in corporate governance has increased since 2001, largely due to the collapse of several large corporations over accounting fraud issues, and most recently because of actions that ultimately required intervention by American taxpayers to prevent several major companies from going bankrupt. The Sarbanes-Oxley Act was passed in 2002, with the specific aim of making corporations accountable and ensuring proper corporate governance.