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. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  2. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  3. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  4. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  5. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  6. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
Trading Center