Corporate Governance (sometimes only Governance) is a term for activities representing the will of owners of the organization or other interest groups (stakeholders).
What is Corporate Governance in practice?
Corporate Governance takes place in practice through a set of rules (policies), strategic objectives of the organization, setting management responsibilities and processes of the organization. It applies primarily to large companies with a complex ownership structure, where it is difficult to transfer the will of the owner towards the running of the organization. Corporate Governance is exercised directly by the owners or their representatives (governing body) - such as statutory bodies, the board of joint stock company, the board of directors, etc.
Unlike the management of the organization, which should be focused in operational management, governance is clearly focused on strategic management, namely strategic and long-term organization-wide goals. Good corporate governance increases the level of investment protection of owners, fulfillment of the strategic objectives of the organization, fulfillment of legal obligations, reduces many risks towards the owners. Well performed corporate governance also ensures that it will not begin to “open scissors” between the views of the owners and management of the organization.
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