corporate governance

Definition

Economics

  • noun the way a company or other organisation is run, including the powers of the board of directors, audit committees, ethics, environmental impact, treatment of workers, directors’ salaries and internal control. Corporate governance reporting in the UK developed from the 1992 Cadbury Committee on the Financial Aspects of Corporate Governance. That was followed by the Greenbury report on directors’ remuneration. Both were later updated by the Hampel Committee. In 1999 the Turnbull Report dealing with internal control introduced the concept that companies should adopt a system to analyse all the risks to the business, not just narrow financial ones. In the USA, corporate governance is mostly prescribed by state law, though the Securities and Exchange Commission has imposed a degree of conformity federally.
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