Theories of Corporate Governance

Theories of corporate governance explain how a company's leadership is organized and held accountable. They focus on balancing the interests of management, shareholders, and other stakeholders. The main theories include Agency Theory, which highlights the conflicts between owners and managers; Stakeholder Theory, emphasizing the importance of all parties impacted by the company; and Stewardship Theory, suggesting managers act as trustworthy stewards of the company’s assets. These frameworks help design structures and policies to ensure effective oversight, ethical behavior, and long-term success of the organization.