Understanding Corporate Governance

Corporate governance combines the processes, policies, laws, and controls that effect the way a company operates. The governance guides the company’s decision-making and administrative processes. The corporate governance, as shown in FIGURE 15-1, is complex and involves people, processes, systems, and more.

The innermost circle represents Board. The next immediate circle represents management and the next immediate circle represents system policies and controls. The penultimate circle is divided into five equal sections representing creditors, stakeholders, employees, vendors, and suppliers. The outermost circle is divided into three equal sections representing government, shareholders, and legal.

FIGURE 15-1 Components that comprise the corporate-governance process.

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