What is Corporate Governance?
Chapter 13 corporate governance in the 21st century notes. Summary of challenges: describe what corporate governance means. Corporate governance is the means and mechanisms used to ensure that managers act in accordance with investors best interests. It encompasses the system by which organizations are directed and controlled by their owners. Corporate governance is related to strategy formulation and the implementation in several ways. Corporate governance ensures that the firm s vision and mission are reflected in its strategy and the way that strategy is executed. Governance mechanisms include monitoring and incentive devices, such as pay and promotion, that can bring managements actions in line with shareholders interests: explain how corporate governance relates to competitive advantage. Evidence suggests that shareholders favour good governance and that it can help firms outperform those with poor governance characteristics.