Frequently Asked Questions
How does the World Bank define corporate governance?
The World Bank defines corporate governance as a blend of regulations and laws that necessitate voluntary practices from the private sector. This definition emphasizes the importance of corporations operating under governance guidelines to generate long-term value, attract employees, and raise capital from investors. The World Bank's definition also underscores the need for corporations to respect the rights of society and shareholders. In essence, corporate governance, as defined by the World Bank, involves solid codes of practice that provide a governing structure within which a company operates. It also requires corporations to assess their role in the larger community and their impact on people. For instance, a corporation that establishes itself in a local community should offer jobs and economic development, treating local employees with respect and ensuring fair distribution of natural resources. The World Bank's definition of corporate governance also extends to the global stage. With globalization, companies are finding themselves in new roles around the world when entering new markets. Regardless of the scale - local, national, or global - a corporation should act ethically. Companies must also adapt to new circumstances and a changing world to adhere to new parameters and additional opportunities. This is particularly relevant in developing economies around the world, where many companies can enter new markets and play a vital role in enhancing national economic well-being.
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