Corporate governance refers to the way in which a company is led, mainly by its directors. It is not concerned with executive management or business operations.
Experience has shown that when companies collapse, poor corporate governance has contributed to the collapse. It is also widely believed that best practice in corporate governance results in good company performance over the long term.
Companies have stakeholders. These are individuals or groups with an interest in what the company does. Stakeholders in companies include financial stakeholders (shareholders and lenders) and non-financial stakeholders (senior management, employees, suppliers, customers and the general public).
Agency theory examines the conflicts of interest between the owners of a company and their agents, the company directors. These conflicts give rise to costs of monitoring the activities of agents and costs of incentivizing them. Ideally, the aim should be to minimize these agency costs.
Reading
Reading
Read Chapter 1 in:
Brian Coyle “ICSA study text Corporate Governance” (2016), 5th edition.
Bob Tricker “Corporate Governance, Principles, Policies, and Practices”, 3rd edition.
Any other Corporate Governance textbook or youtube videos are useful.
