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.