Corporate Governance: Concepts and Applications

The importance of governance has emerged during the past few decades when successive global financial crises have decimated the economies of many developed countries and other emerging economies, but despite that, the concept of governance is still somewhat vague to many people.

Since the late 1970s, of the last century, the governance of economic entities, such as companies, has been the subject of great controversy and debate around the world, and in particular in the United States.

Considering the needs and desires of shareholders towards exercising their rights in the ownership of companies, and increasing the value of their shares. The duties and responsibilities of the heads and directors of various companies have also expanded, and the duty of loyalty to these companies that they preside over and also to their shareholders has expanded.

The comprehensiveness of the concept of governance of organizations, business establishments, and companies in many dimensions, whether economic, legal, administrative, accounting, social, or ethical, led to disagreement on finding a unified definition or concept of the term governance. And that the widespread of the concept of governance after the occurrence of many economic collapses and crises for many giant economic entities, has become an unequivocal sign of the effectiveness of the role played by this term and the means it includes for the treatment and reform of such collapses and crises.

Thus, the concept of governance must help eliminate conflict and achieve harmony and balance between the interests of the different groups that have an interest in economic entities, whether from within or from outside, by limiting management control and giving more powers to other groups, especially shareholders and other stakeholders.

The common denominator between the different concepts of the term governance shows interest in developing performance and localizing the principles of disclosure, transparency, discipline, and justice within economic entities, which has been confirmed by many studies.