Corporate Governance Defined

If management is about running businesses, governance is about seeing that it is run properly. All companies need governing as well as managing. Bob Tricker coined the term “corporate governance”.

“Corporate governance is the system by which business corporations are directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, such as the board, managers, shareholders and other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs. By doing this, it also provides the structure through which the company objectives are set, and the means of attaining those objectives and monitoring performance.” (UTS Centre for Corporate Governance, 2011).

The Organization of Economic Co-Principles for Operation and Development (OECD, 1999) defines “corporate governance” as providing the structure for determining the organizational objectives and monitoring performance to ensure that objectives are attained.

According to National Association of Corporate Directors (NACD) “Providing strategic direction and establishing control over the execution of the business strategy are fundamental governance responsibilities. They must include the structural oversight of IT investments.”

Because IT is an integral part of business operations, IT Governance is an integral part of Corporate Governance.