A system specifying the division of duties, rights, and responsibilities
among various participants in a corporation, such as the board of directors,
the various committees within the board of directors, operating managers, and
shareholders. Corporate governance enumerates the rules, guidelines, and procedures
for making decisions affecting corporate affairs. The term has received particular
attention in recent years because of massive lawsuits against the directors
and officers of a number of high-profile corporations that filed for bankruptcy.
Many business commentators, as well as insurance industry observers, believe
that a breakdown of corporate governance, especially in the area of financial
and accounting controls, was largely responsible for such failures. See also
Sarbanes-Oxley Act of 2002.
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