Corporate governance definition
/What is Corporate Governance?
Corporate governance is the system of rules and controls used by a board of directors to oversee a company. An acceptable level of corporate governance involves being transparent about providing information to outsiders, ensuring that a strong sense of ethical behavior permeates the organization, and ensuring that a strong control system is employed to detect variances. The proper level of governance is derived by balancing the interests of investors, business partners, regulators, lenders, and the community.
Factors Causing Weak Corporate Governance
Corporate governance is significantly weakened when the company president also serves as the chairman of the board, as well as when board members are all insiders who work for the president. In these situations, there is no independent oversight of the activities of the management team.