Corporate governance

Corporate governance - a way of ownership control, in relations between shareholders, their formal representatives and the management exercised by the owner or group of owners.

The essence of corporate governance

Corporate governance is understood as the enforcement of proprietary rights by formal representatives on the supervisory boards. Arises from the provisions of the corporate law and the Statute of the company. Supervision refers only to the prevailing relationship between shareholders and managers and skips the remaining stakeholders.

In Poland, due to the applied controls mechanisms, emerging corporate governance system is an internal model, hence it can be concluded that in most cases, the supervision over enterprises is dependent on shareholders.

Shareholder governance and corporate governance

Shareholder governance is narrower form of corporate governance, encompassing only issues related to the rights of shareholders to their assets entrusted to the managers of the company. The concept of governance has a wider meaning and its scope includes formal and informal structure of the influence on the critical decisions made by managers. It concerns not only the owners of capital, but all interest groups (stakeholders) who are interested in the situation of the company, such that the operation of the businesses has an impact (employees, unions, suppliers, customers).

The reasons which have led to the extension of the scope of corporate governance were:

• deepening of globalization processes that influenced changes in the environment of the organization,
• intensified competition, which forces managers to look for more efficient, effective solutions that allow to take full advantage of resources and development.

See also:

• Continental model of corporate governance
• Anglo-Saxon model of corporate governance
• Shareholder value added

Corporate governance — recommended articles

Holding — Spin-out — Invention and innovation — Shareholder theory — Development of the organization — Open innovation — Types of organisation — Principles of organization of public sector entities — Stakeholders

References

• Charkham, J. P. (1995). Keeping good company: A study of corporate governance in five countries. Oxford University Press.
• Klapper, L. F., & Love, I. (2004). Corporate governance, investor protection, and performance in emerging markets. Journal of corporate Finance, 10(5), 703-728.
• Williamson, O. E. (1988). Corporate finance and corporate governance. The journal of finance, 43(3), 567-591.