Corporate governance refers to the issues
associated with the way corporations are structured, managed and operated. The
use of the term “corporate governance”, the evolution of the concept and what
it entails has started in the early 1980’s.
Among the first was the Cadbury Committee. They defined the purpose of corporate governance in 1992 namely, as a set of processes, customs and policies that frame the business of the company and help manage the subsidiaries. This is then operationalized in a uniform method through administered or controlled directives.
The most quoted and referred to document in
this field is the OECD principles corporate governance. OECD defines it as a
set of relationships between a company’s management, its board, its
shareholders, and other stakeholders. Corporate governance also provides the
structure through which the objectives of the company are set. The means of
attaining those objectives and performance monitoring are determined. So, the
main recommended principles are stated as rights and equitable treatment of
shareholders, interests of other stakeholders, role and responsibilities of the
board, integrity and ethical behavior, disclosure and transparency.