Corporate governance is the process of setting rules, policies, control and resolutions to encourage positive corporate culture and conduct. It also shields companies from threats to their business and crises such as corruption in leadership and cybersecurity threats. It includes contingency plans that assist companies in dealing with these forces of business and come out the other side stronger and more resilient.
Corporate governance structures and practices differ according to the size of a company and industry, its ownership structure and the jurisdiction. These governance structures and practices, despite their different, should all have the same objective: to create long-term value to shareholders. They should also be able to adapt their governance practices to achieve this objective.
The board of directors for a company is accountable for establishing objectives for strategic planning, appointing top management and monitoring them, as well as representing the interests of shareholders. Board members must comprehend their responsibilities and work with management to fulfill them in a way that helps the development of the business as well as financial performance.
Stakeholders should be urged to engage in shareholder outreach as well as dialogue with the board and management of an organization. They will be able speak out in areas that were traditionally the responsibility of the board and the management, like strategic direction and making decisions. In doing so, it is important for management and the board to be transparent and honest with the stakeholders regarding their governance structures and practices as well as their motivations for using them.