Which best defines corporate governance?

• A. Rules in which a business is Operated by its Board of Directors
• B. Market competition principles
• C. Employee performance metrics
• D. Tax compliance requirements

Answer: (A)

Corporate governance is the framework of rules, practices and processes by which a company is directed and controlled. It centers on how the board of directors oversees management, sets strategy, ensures accountability, and protects the interests of stakeholders through effective internal controls and oversight. This describes how authority and responsibility are structured and how decisions are made and monitored at the highest level of the organization. The other options point to aspects outside governance: market competition principles relate to how firms compete externally, not how a company is governed; employee performance metrics are about internal management and HR; and tax compliance relates to legal obligations rather than the governance framework itself.