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Corporate Board Governance

Corporate board governance is the method in which a corporation's board handles its internal affairs. This includes the rules, laws and policies of the corporate board, which are determined by the board, and in some cases, shareholders, in conjunction with legal constraints and industry customs. In addition, corporate board governance involves how the corporation deals with its shareholders. Ultimately, a corporate board's governance is utilized in order to make sure that the businesses affairs are handled in a consistent, ethical and legal way in order to promote accountability. Following the Enron scandal, there has been a significant spotlight on corporate board governance. Specifically, there has been a review of the internal practices of corporate board compensation and benefits and how this compares to the interests of the shareholders of the organization. Laws such as the Sarbanes-Oxley Act seek to monitor corporate governance and prevent corporate abuses.

Fast Facts

  • Monitoring of corporate board governance is one way to increase accountability
  • Corporate boards owe a fiduciary duty to the shareholders

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