There is no uniform definition as most are based on implicit or explicit assumptions about the main objective of the firm. However, there is no universal agreement as to what this objective should be. Below are several definitions that may help students understand the concept:
- Larcker and B. Tayan: “a collection of control mechanisms that an organization adopts to prevent potentially self-interested managers from engaging in activities detrimental to the shareholders and stakeholders”.
- Shleifer and R. Vishny “The ways in which suppliers of finance assure themselves of getting a return on their investment”
- Sir Adrian Cadbury (1999) “Corporate governance is concerned with holding the balance between economic and social goals and between individual and communal goals….the aim is to align as nearly as possible the interests of individuals, corporations, and society”
So what is corporate governance?
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