What is corporate governance?

Corporate governance refers to the system of rules, practices, and processes by which a company is directed and controlled. This framework is crucial for ensuring accountability, fairness, and transparency in a company's relationship with its stakeholders, including shareholders, management, customers, suppliers, financiers, government, and the community.

Good corporate governance helps to align the interests of various stakeholders and reduces the likelihood of misuse of power within the organization, thereby enhancing the integrity of the company and increasing investor confidence. It encompasses a wide range of practices, such as establishing a strong board of directors, defining corporate policies, and ensuring compliance with laws and regulations.

In contrast, strategies solely focused on maximizing short-term profits do not encompass the broader objectives or ethical considerations inherent in corporate governance. It is also separate from frameworks purely related to employee engagement and motivation or methods for analyzing market trends, which are specific to human resource management and market analysis, respectively. Instead, corporate governance is about the overall management and control structure of the organization, making it fundamental to the company's health and sustainability.