Corporate governance is the system by which a company is directed and controlled. It clarifies who has power, who makes decisions, how performance is monitored, and how accountability is ensured.
In exams, questions typically ask:
You should be able to:
Corporate governance refers to the framework of rules, relationships, systems and processes within and by which authority is exercised and controlled in corporations (concept).
Simple definition (write in 1–2 lines): Corporate governance is the system of direction and control of a company to ensure accountability, fairness, and transparency in relationships with stakeholders (concept).
Objectives include:
Access the complete note and unlock all topic-wise content
It's free and takes just 5 seconds
Business ethics refers to implementing appropriate business policies and practices with regard to arguably controversial subjects. Some issues that come up in a discussion of ethics include corporate governance, insider trading, bribery, discrimination, social responsibility, and fiduciary responsibilities.
Get instant access to notes, practice questions, and more benefits with our mobile app.
Download this note as PDF at no cost
If any AD appears on download click please wait for 30sec till it gets completed and then close it, you will be redirected to pdf/ppt notes page.
Corporate governance is the system by which a company is directed and controlled. It clarifies who has power, who makes decisions, how performance is monitored, and how accountability is ensured.
In exams, questions typically ask:
You should be able to:
Corporate governance refers to the framework of rules, relationships, systems and processes within and by which authority is exercised and controlled in corporations (concept).
Simple definition (write in 1–2 lines): Corporate governance is the system of direction and control of a company to ensure accountability, fairness, and transparency in relationships with stakeholders (concept).
Objectives include:
Commonly accepted principles (write any 4–6):
Corporate governance is needed because it:
Agency theory explains the relationship between:
When agents may act in their own interest rather than principals’ interest (e.g., perks, risky decisions, earnings manipulation) (concept).
Costs incurred to control agency problems:
Governance reduces agency problems through board monitoring, incentives, audits, and disclosures (concept).
A company has responsibilities not only to shareholders but also to stakeholders such as: employees, customers, suppliers, lenders, government, and society (concept).
Good governance balances interests and ensures sustainable decisions (e.g., safety, fair labour, environment) (overview).
Exam tip: Write 3–4 strong differences with keywords.
Ethics provides the values (integrity, fairness). Governance provides the systems (board oversight, controls, disclosure) to ensure those values are practiced (concept).
In short: Ethics = what is right, Governance = how the organization ensures it.
From this topic
Any three objectives:
Write any three points.
Any three principles:
Write any three with 1-line explanation.
Corporate governance is the system of direction and control to ensure accountability, fairness and transparency (concept).
Conclusion: Strong governance builds trust and supports sustainable performance (concept).