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As University Unit 1: Understanding Corporate Governance
Unit 1: Understanding Corporate Governance Notes
CONTENTS
Objectives
Introduction
1.1 Corporate Governance: An Overview
1.1.1 Definition of Corporate Governance
1.1.2 Need of Corporate Governance
1.1.3 Scope of Corporate Governance
1.1.4 Participants to Corporate Governance
1.1.5 Importance and Benefits of Corporate Governance
1.1.6 Role of Corporate Governance
1.1.7 OECD Parameters and Principles
1.1.8 Issues involved in Corporate Governance
1.2 Historical Perspective of Corporate Governance
1.3 Summary
1.4 Keywords
1.5 Self Assessment
1.6 Review Questions
1.7 Further Readings
Objectives
After studying this unit, you will be able to:
Define corporate governance
State the needa and importance of corporate governance
Discuss the issues and benefits of corporate governance
Know the history of corporate governance
Introduction
Corporate governance is a central and dynamic aspect of business. The term ‘governance’ is
derived from the Latin word gubernare, meaning ‘to steer’, usually applying to the steering of a
ship, which implies that corporate governance involves the function of direction rather than
control. In fact, the significance of corporate governance for corporate success as well as for
social welfare cannot be overstated. Recent examples of massive corporate collapse resulting
from weak systems of corporate governance have highlighted the need to improve and reform
corporate governance at international level. In the wake of Enron and other similar cases,
countries around the world have reacted quickly by pre-empting similar events dramatically.
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