What is definition of Corporate Governance?

Corporate governance is the system by which companies are directed and controlled. It involves relationships between the company’s board, shareholders and stakeholders. It is actually conducted by the board of directors and the concerned committees to ensure accountability, fairness, and transparency in a company's relationship with its all stakeholders (financiers, customers, management, employees, government, and the community).  It is all about balancing individual and societal goals, as well as, economic and social goals.

The corporate governance is very important in organization because it can make the organization be a systematic. It also can help to detect and prevent the corporate scandals, fraud, and criminal liability of the organization.

The perception of good corporate governance is an important of the image of an organization, whether public or private. For example, when The Nature Conservancy, a not-for-profit organization, was perceived to have poor corporate governance, the public contributions to this organization were substantially reduced. So, when the corporate governance image is good, the reputation of the organization also be improved and makes it more attractive to customers, investors, suppliers and, in the case of nonprofit organizations, contributors.

On the other hands, it also have a benefits that are ensures corporate success and economic growth. Strong corporate governance also can maintains investors’ confidence and the company can raise capital efficiently and effectively. Besides that, it provides proper inducement to the owners as well as managers to achieve objectives that are in interests of the shareholders and the organization. This also ensures that the interests of all shareholders are safeguarded. Good corporate governance also minimizes wastage's  corruption, risks and mismanagement. It also helps in development and ensures organization in managed in a manner that fits the best interests of all.