Market-Based Corporate Governance System

AAA

DEFINITION of 'Market-Based Corporate Governance System'

A system relying on the investors of a firm to exert control over how the corporation is to be managed. A market-based corporate governance system defines the responsibilities of the different participants in the company, including shareholders, the board of directors, management, employees, suppliers and customers.

INVESTOPEDIA EXPLAINS 'Market-Based Corporate Governance System'

Corporate governance systems have developed differently throughout the world. The market-based corporate governance system is based on Anglo-American law. Since the markets are the primary source of capital, investors are given the most power in determining corporate policies. Therefore, the system relies on the capital markets to exert control over the corporation's management.

RELATED TERMS
  1. CalPERS

    The California Public Employees' Retirement System (CalPERS), ...
  2. Corporate Governance

    The system of rules, practices and processes by which a company ...
  3. Proxy

    1. An agent legally authorized to act on behalf of another party. ...
  4. Internal Controls

    Methods put in place by a company to ensure the integrity of ...
  5. Corporate Governance Quotient - ...

    A metric developed by Institutional Shareholder Services (ISS) ...
  6. Best Practices

    A set of guidelines, ethics or ideas that represent the most ...
Related Articles
  1. Evaluating The Board Of Directors
    Insurance

    Evaluating The Board Of Directors

  2. Governance Pays
    Options & Futures

    Governance Pays

  3. Morningstar's Stewardship Grade Scores ...
    Mutual Funds & ETFs

    Morningstar's Stewardship Grade Scores ...

  4. Who is responsible for protecting and ...
    Investing

    Who is responsible for protecting and ...

Hot Definitions
  1. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center