Corporate governance is a nebulous subject of practice, policy and ethics that has many stakeholders. It covers the systems and structures that ensure transparency, accountability and probity in reporting and operations of a company. It includes the way in which boards supervise the executive management of a company, and how they select and monitor the CEO’s performance. It also encompasses the manner directors make financial decisions and how they communicate these to shareholders.

Corporate Governance was a subject of intense debate in the 1990s due to the introduction of structural reforms that helped build markets in former soviet countries and the Asian financial crisis. The 2002 Enron scandal, followed by a surge of shareholder activism in the form of institutional shareholders and the 2008 financial crisis, heightened scrutiny. Corporate governance is a hot topic today, with new innovations and pressures constantly emerging.

The Anglo-Saxon or “shareholder primacy view” places the focus on shareholders. Shareholders select the board of directors which oversees management and sets strategic aims for the company. The board is responsible for deciding on and reviewing the CEO, setting and monitoring the enterprise’s policies on risk management, supervising the company’s operations, and providing the shareholders with reports on their stewardship.

Integrity, transparency, fairness, and accountability are the four main principles of a successful corporate governance. Integrity relates to the ethical and responsible way in which board members make decisions. Transparency is about transparency and honesty, as well as full disclosure of material information to all stakeholders. Fairness is about how boards treat employees, suppliers and customers. Responsibility relates to how a board behaves towards its own members as well as the community as a whole.