Corporate governance is the way by which businesses are directed and controlled.
For the most part, by law and tradition, the board of directors (representing the shareholders of the company) is tasked with ensuring the business is properly and honestly managed. Board members, the CEO, and managing partners have a fiduciary duty to protect the interest of shareholders.
Several board committees (the audit committee and the compensation committee) are generally involved in oversight of some of the most significant governance issues: whether the enterprise complies with accounting and ethical standards, and whether its leaders are being properly compensated and provided financial incentives for improving performance.
Companies may also elect to establish the position of Chief Ethics Officer, giving that individual responsibility for ensuring compliance and adherence to the organization's stated values and ethics code.
Learn more about corporate governance in our latest infographic.
