According to the Organisation for Economic Co-operation and Development (OECD),

Corporate Governance is the “system by which business corporations are directed and
controlled. It specifies the distribution of rights and responsibilities among different
participants in the corporation, such as the board of directors who acts as the governing
body of the corporation, managers who is responsible for setting, managing and executing
the strategies of the company, shareholders who invest in a corporation by buying its stocks
and receive economic benefits in return and other stakeholders, and spells out the rules and
procedures for making decisions on corporate affairs.”

Good corporate governance starts with personal integrity. In corporate governance, it starts
with the CED who establishes the values and sets the example for the rest of the
organization to follow.

In a corporate framework, the corporation is generally owned by shareholders who elect

the Board of Directors whose key purpose is to ensure the company’s prosperity by
strategically directing the company’s affairs. The Board of Directors appoints a
management team to oversee the day-to-day operation of the company. The Corporate
Framework then highlights the presence of external forces in the governance of a
corporation. This shows that governance requires ensuring the balance between the rights
of the majority shareholders and the right of stakeholders that the Board and Management
must consider.

Corporate Governance includes both social and institutional aspects. It encourages a

trustworthy, moral, as well as ethical environment.

Good corporate governance guarantees corporate success and economic growth. It

preserves the stockholders’ confidence, as a result of raised. It provides proper incentives
to the owners as well as managers to achieve objectives that are in interests of the
shareholders and the organization. Good corporate governance also lessens wastages,
corruption, risks and mismanagement. It ensures organization in managed in a manner that
fits the best interests of all.

References:
Felipe Alfonso, Francisco Roman and Rose Quiambao (2005). Social Responsibility and
Governance in the Philippines.