There is not one conclusive definition of corporate governance. Governance Institute, for example, defines it in these terms:
Governance encompasses the system by which an organisation is controlled and operates, and the mechanisms by which it, and its people, are held to account. Ethics, risk management, compliance and administration are all elements of governance.
Other useful definitions of governance are provided below.
Corporate governance involves a set of relationships between a company’s management, its board, its shareholders and other stakeholders. Corporate governance also provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined.
Corporate governance is ‘the framework of rules, relationships, systems and processes within and by which authority is exercised and controlled in corporations’. It encompasses the mechanisms by which companies, and those in control, are held to account.
Justice Owen, HIH Royal Commission, ‘The Failure of HIH Insurance, Volume 1: A Corporate Collapse and Its Lessons’, Commonwealth of Australia, April 2003 — pg xxxiii; Justice Owen, ‘Corporate Governance: Level upon Layer’, Speech to 13th Commonwealth Law Conference 2003, Melbourne, 13–17 April 2003 — pg 2