A-Z of Corporate Governance

A

Abatement

Measures to reduce or eliminate financial, environmental, or operational risks. In corporate governance, abatement practices focus on compliance with regulations, risk management, and ensuring sustainable business operations.

Abnormal returns and volumes

Returns and trading volumes that deviate significantly from normal levels. Corporate governance analyzes these anomalies to understand market reactions to corporate actions or news, ensuring transparency and investor protection.

Acceleration remedy

A contractual provision allowing a lender to demand full repayment if certain conditions are breached. Corporate governance ensures such remedies are used fairly and transparently, protecting creditor rights and maintaining financial stability.

Accountability

Accountability in corporate governance involves the obligation of the company's management and board to provide explanations and justifications for their decisions and actions to stakeholders, including shareholders, employees, customers, and the community. It ensures transparency, responsibility, and ethical conduct, promoting trust and integrity within the organization.

Accounting harmonization

The process of standardizing accounting practices across different jurisdictions. Good governance promotes harmonization to enhance comparability, transparency, and investor confidence.

Accounting standards

Guidelines for financial reporting and disclosure. Effective corporate governance ensures compliance with these standards, maintaining transparency and protecting stakeholder interests.

Acqui-hire

Acquiring a company primarily for its talent rather than its products. Governance ensures such acquisitions align with strategic goals and manage integration risks effectively.

Acquisition premium

The amount paid over the market value to acquire a company. Effective governance ensures premiums are justified by strategic benefits and potential synergies.

Acquisitions

Acquisitions refer to the process where one company purchases most or all of another company's shares or assets to take control. This can involve strategic decisions to expand market share, acquire new technologies, or achieve synergies. Proper governance ensures such deals align with shareholders' interests and regulatory standards.

Acting in concert

When investors collaborate to influence a company's management and policies. Corporate governance ensures such actions comply with regulations and protect all shareholders' interests.

Active funds

Investment funds managed actively to outperform the market. Governance ensures active funds operate transparently, ethically, and in the best interests of investors.

Active investors

Shareholders who engage with company management to influence decisions. Effective governance facilitates active investor engagement, ensuring their concerns are addressed and incorporated into corporate strategies.

Active ownership

The practice of shareholders using their rights to influence company policies and practices. Good governance supports active ownership through transparent communication and responsive management.

Active shareholders

Shareholders who actively participate in governance by voting, attending meetings, and engaging with management. Effective governance ensures their involvement is constructive and aligned with long-term goals.

Activism

Activism refers to the efforts by shareholders to influence a company's behavior by exercising their rights. This can involve pushing for changes in management, strategy, or operations to enhance shareholder value. Activist shareholders often use their stakes to advocate for improved governance, transparency, and accountability.

Activism waves

Periods of increased shareholder activism. Corporate governance adapts to activism waves by ensuring transparency, responsiveness, and alignment with shareholder interests.

Activist hedge fund

Hedge funds that acquire significant stakes in companies to influence management and strategic direction. Good governance ensures that their interventions are aligned with long-term value creation.

Activist interventions

Actions taken by activist investors to influence company policies. Corporate governance ensures these interventions are constructive, transparent, and in the best interests of all stakeholders.

Activist investors

Shareholders who seek to influence a company's direction and policies. Effective governance engages with activists to address their concerns and align strategies with shareholder interests.

Activist settlements

Agreements between companies and activist investors to resolve disputes. Good governance ensures settlements are fair, transparent, and promote long-term value.

Activist shareholders

Shareholders who actively seek to change company policies or management. Effective governance involves engaging with these shareholders to address their concerns and align with strategic goals.

Ad hoc bailout

Unplanned financial assistance to a struggling company. Effective governance involves transparency and accountability in providing such bailouts to protect stakeholder interests.

Ad hoc disclosure

Non-regular disclosure of important information. Good governance ensures that ad hoc disclosures are timely, accurate, and comply with regulatory requirements to maintain transparency.

Administrative law

The body of law governing the activities of administrative agencies. Corporate governance ensures compliance with administrative law to promote transparency and accountability in interactions with regulators.

Administrative procedure act

The Administrative Procedure Act (APA) is a U.S. federal statute that governs the process by which federal agencies develop and issue regulations. It ensures transparency, public participation, and accountability in the rule-making process, impacting how corporations comply with regulatory requirements and interact with government agencies.

Administrative rulemaking

The process by which administrative agencies create regulations. Good governance involves engaging with rulemaking processes to ensure that company practices comply with new regulations.

Adverse selection

A situation where one party in a transaction has more information than the other, leading to suboptimal outcomes. Effective governance includes measures to mitigate adverse selection, such as transparency and due diligence.

Advisory voting

Non-binding votes by shareholders on specific issues, such as executive compensation. Good governance uses advisory voting to gauge shareholder sentiment and inform decision-making.

Affiliated funds

Investment funds that are part of the same financial group. Effective governance ensures that transactions between affiliated funds are conducted transparently and in the best interests of investors.

Agency

Refers to the relationship between shareholders (principals) and company executives (agents). In corporate governance, it addresses how agents are expected to act in the best interests of principals, ensuring that management decisions align with shareholders' goals and reduce conflicts of interest.

Agency capitalism

A system where managers and directors act as agents for shareholders. Good governance mitigates agency conflicts by aligning management actions with shareholder interests through incentives and oversight.

Agency conflicts

Disputes between shareholders and management over control and decision-making. Effective governance involves mechanisms to align interests and resolve conflicts transparently.

Agency conflicts in fund management

Conflicts between fund managers and investors. Good governance includes measures to align fund managers' actions with investors' interests, such as performance-based fees and transparency.

Agency costs

These are costs incurred due to conflicts of interest between shareholders and management. They include monitoring expenses, bonding costs, and residual losses. Effective governance mechanisms aim to minimize these costs by aligning interests and enhancing accountability.

Agency costs of debt

Costs arising from conflicts between shareholders and debt holders. Good governance involves managing these conflicts through covenants, monitoring, and transparent reporting.

Agency costs of free cash flow

Risks associated with excess cash that may be misused by management. Effective governance includes measures to ensure that free cash flow is used productively and aligns with strategic goals.

Agency frictions

Challenges arising from conflicts between principals and agents. Good governance reduces frictions through clear policies, alignment of interests, and effective communication.

Agency problems

Issues resulting from conflicts of interest between shareholders and management. Effective governance includes mechanisms to mitigate these problems, such as performance-based incentives and robust oversight.

Agency theory

A framework explaining the relationship between principals and agents. Corporate governance applies agency theory to design structures and practices that align interests and enhance accountability.

Agglomeration economies

Cost advantages resulting from businesses clustering together. Good governance ensures that agglomeration benefits are leveraged strategically, promoting efficiency and innovation.

Aggregate litigation

Legal actions involving multiple plaintiffs or cases. Corporate governance ensures that aggregate litigation is managed transparently and fairly, protecting the company’s interests and reputation.

Aggregate outcomes

The overall results of corporate actions or policies. Effective governance involves analyzing aggregate outcomes to assess performance, inform decision-making, and enhance strategy.

Aggregation of information

The process of collecting and combining data from various sources. Good governance ensures that information aggregation is accurate, timely, and used to support informed decision-making.

Aggressive accounting

Practices that push the boundaries of accounting standards to present a more favorable financial picture. Effective governance includes controls to prevent aggressive accounting and ensure transparency.

AI borrower classification

Using AI to assess and categorize borrowers' creditworthiness. Effective governance ensures that AI classifications are accurate, fair, and comply with regulatory standards.

AI-enabled credit scoring

The use of AI to evaluate credit risk. Good governance ensures that AI credit scoring models are transparent, unbiased, and compliant with regulations to protect borrowers and lenders.

AIFMD

The Alternative Investment Fund Managers Directive, a regulatory framework for alternative investment funds in the EU. Good governance ensures compliance with AIFMD to protect investors and promote transparency.

Algorithmic discrimination

Bias in AI algorithms leading to unfair outcomes. Good governance involves identifying and mitigating algorithmic discrimination to ensure fairness and ethical AI use.

All-shareholder returns

The total return to all shareholders, including dividends and capital gains. Effective governance focuses on maximizing all-shareholder returns through strategic decision-making and transparent reporting.

Allocation of authority

The distribution of decision-making power within an organization. Good governance ensures that authority is allocated transparently and aligns with strategic goals and accountability.

Allocation of regulatory powers

The distribution of regulatory responsibilities among authorities. Effective governance involves ensuring clarity, efficiency, and accountability in the allocation of regulatory powers.

Allocation of talent

The strategic placement of employees within an organization. Good governance ensures that talent allocation aligns with business needs, promotes diversity, and supports growth and innovation.

Allocative efficiency

The optimal distribution of resources to maximize value. Good governance promotes allocative efficiency through strategic planning, transparent decision-making, and effective resource management.

Allowance for corporate equity

A tax policy allowing deductions based on equity financing. Corporate governance ensures compliance with such policies to optimize tax efficiency and support financial stability.

Alpha

A measure of investment performance relative to a benchmark. Good governance ensures that alpha is generated through ethical practices, transparency, and alignment with investor interests.

Alternative financing solutions

Non-traditional methods of raising capital, such as crowdfunding. Effective governance involves evaluating and implementing these solutions transparently and strategically to support growth and innovation.

Alternative investment fund managers directive

EU regulation governing alternative investment funds. Good governance ensures compliance with this directive to protect investors and promote transparency and stability.

Alternative investments

Non-traditional assets like real estate, commodities, and private equity. Good governance ensures these investments are managed transparently, ethically, and align with the overall strategic objectives.

Altruism

Selfless concern for others' well-being. In corporate governance, altruism can be reflected in corporate social responsibility initiatives that promote social and environmental benefits.

Ambiguity aversion

Preference for known risks over unknown risks. Good governance includes strategies to manage and communicate uncertainties clearly to support informed decision-making.

American rule

A principle where each party in a lawsuit pays its legal fees, regardless of outcome. Corporate governance ensures transparency and fairness in litigation processes, adhering to applicable legal principles.

Angels

Individual investors who provide capital to startups. Effective governance involves ensuring that angel investments are aligned with strategic goals, transparent, and support sustainable growth.

Announcement effects

Market reactions to news about a company's actions or events. Good governance analyzes announcement effects to understand investor sentiment and adjust strategies accordingly.

Announcement period return

The stock price movement during the period surrounding a significant announcement. Effective governance uses these returns to gauge market reaction and assess strategic decisions.

Annual general meeting

A yearly gathering of a company's shareholders. Good governance ensures that AGMs are conducted transparently, allowing shareholders to engage with management and vote on important issues.

Annual incentive plans

Compensation plans based on yearly performance. Effective governance ensures these plans align with strategic goals, motivate executives, and promote long-term value creation.

Anti-bribery

Policies and practices to prevent bribery and corruption. Good governance includes robust anti-bribery measures to ensure ethical conduct and compliance with legal standards.

Anti-director rights index

A measure of shareholder protection rights in different countries. Effective governance involves understanding and adhering to these rights to protect shareholder interests and promote transparency.

Anti-domination principle

Policies to prevent majority shareholders from exploiting minority shareholders. Good governance ensures that all shareholders are treated fairly and equitably.

Anti-graft law

Legislation aimed at preventing corruption and unethical practices. Corporate governance ensures compliance with anti-graft laws to maintain ethical standards and public trust.

Anti-political posturing

Avoiding unnecessary political statements or actions. Good governance involves maintaining neutrality and focusing on business objectives to protect the company's reputation and stakeholder interests.

Anti-recharacterization laws

Laws preventing the misclassification of financial transactions. Effective governance ensures compliance with these laws to maintain transparency and accuracy in financial reporting.

Anti-self-dealing index

A measure of legal protections against insider transactions. Good governance involves adhering to these protections to prevent conflicts of interest and protect shareholder value.

Anti-takeover defenses

Strategies to prevent or deter hostile takeovers. Effective governance ensures these defenses are used appropriately to protect shareholder interests and align with long-term strategic goals.

Anti-takeover law

Legislation regulating the prevention of hostile takeovers. Good governance ensures compliance with these laws to maintain fair and transparent corporate practices.

Anti-takeover mechanisms

Tools used to defend against hostile takeovers. Corporate governance ensures these mechanisms are used transparently and align with the best interests of all stakeholders.

Anti-takeover provisions

Clauses in a company’s charter or bylaws to deter hostile takeovers. Good governance ensures these provisions are transparent, justified, and protect shareholder value.

Anti-takeover statutes

Laws enacted to prevent hostile takeovers. Effective governance ensures compliance with these statutes, balancing defense mechanisms with shareholder interests.

Antishareholder mechanisms

Strategies that disadvantage shareholders, often used in takeovers. Good governance avoids such mechanisms to ensure fairness, transparency, and alignment with shareholder interests.

Antitakeover defenses

Measures taken to protect a company from hostile takeovers. Effective governance involves using these defenses appropriately to safeguard shareholder value and strategic goals.

Antitrust

Laws designed to promote fair competition and prevent monopolies or unfair business practices. In corporate governance, antitrust regulations ensure companies operate in a competitive environment, fostering innovation and protecting consumer interests.

App-based trading platforms

Digital platforms for trading securities. Corporate governance ensures these platforms operate transparently, securely, and in compliance with regulations to protect investors.

Application programming interfaces

APIs allow different software systems to communicate. Effective governance involves ensuring that APIs are secure, reliable, and used to enhance operational efficiency and transparency.

Appointment of directors

The process of selecting board members. Good governance ensures that appointments are based on merit, transparency, and alignment with the company’s strategic goals.

Appointment rights

Shareholders' rights to appoint directors. Effective governance ensures that these rights are respected and that the appointment process is transparent and fair.

Appraisal

The evaluation of a company's assets or value. Good governance ensures appraisals are accurate, transparent, and used to inform strategic decisions and protect stakeholder interests.

Appraisal arbitrage

Investors buying shares to participate in legal proceedings for a higher valuation. Effective governance involves managing appraisal rights transparently and protecting shareholder interests.

Arag-Garmenbeck

A principle in German corporate law relating to shareholder litigation rights. Good governance ensures compliance with this principle to protect shareholder rights and promote transparency.

Arbitrage

The practice of taking advantage of price differences in different markets. Effective governance involves monitoring arbitrage activities to ensure they are conducted ethically and transparently.

Arbitration

A method of resolving disputes outside the courts. Corporate governance ensures that arbitration processes are fair, transparent, and align with legal standards to resolve conflicts efficiently.

Arithmetic average

The simple average of a set of numbers. In corporate governance, this metric is used to analyze financial data and performance indicators to inform decision-making.

Asian financial crisis

A major financial crisis in the late 1990s that impacted many Asian economies. Corporate governance involves learning from such crises to improve risk management and resilience.

Asset allocation

The strategy of distributing a company's resources among different investments to balance risk and return. Effective governance ensures that asset allocation decisions align with the company’s strategic objectives and risk tolerance.

Asset managers

Professionals who manage investments for individuals or institutions. Good governance ensures that asset managers operate transparently, ethically, and in the best interests of their clients.

Asset partitioning

Separating assets into distinct groups to limit liability and protect interests. Corporate governance ensures that asset partitioning is done transparently and aligns with strategic goals.

Asset pricing

The determination of asset values. Effective governance ensures that asset pricing models are accurate, transparent, and used to inform investment decisions and risk management.

Asset substitution

Risky investments undertaken by managers that transfer value from debt holders to shareholders. Good governance involves monitoring and mitigating such actions to protect all stakeholders.

Assignment for the benefit of creditors

A process where a company assigns its assets to a trustee to pay off debts. Good governance ensures this process is transparent, fair, and compliant with legal standards.

Assignment models

Frameworks for assigning tasks or resources. Effective governance uses assignment models to allocate responsibilities transparently and efficiently, aligning with strategic goals.

Asymmetric information

Occurs when one party in a transaction has more or better information than the other. In corporate governance, this can lead to moral hazard and adverse selection, making transparency and disclosure critical to mitigate these risks.

AT1 bonds

Contingent convertible bonds that absorb losses when the issuing bank's capital falls below a certain level. Effective governance involves managing these instruments transparently and aligning with regulatory requirements.

Audit

An independent examination of financial statements and operations. Good governance involves conducting regular audits to ensure accuracy, transparency, and compliance with standards.

Audit committee

A board committee responsible for overseeing the audit process. Effective governance ensures that audit committees are independent, competent, and focused on ensuring transparency and accountability.

Aufsichtsrat

The supervisory board in German corporate governance, responsible for overseeing management. Effective governance ensures that the Aufsichtsrat operates independently, transparently, and in the best interests of stakeholders.

Australian banking royal commission

An inquiry into misconduct in Australia's banking sector. Corporate governance involves learning from such inquiries to improve transparency, accountability, and ethical standards.

Authorized participants

Entities that create or redeem shares in exchange-traded funds (ETFs). Good governance involves ensuring that authorized participants operate transparently and align with regulatory standards.

Autopoiesis

A concept in systems theory where a system is self-creating and maintaining. In corporate governance, it refers to the self-regulating and self-improving nature of effective governance systems.

B

B. Corp.

Also known as a Benefit Corporation, this legal status for businesses includes a commitment to higher standards of social and environmental performance, accountability, and transparency. Good governance in a B. Corp. involves integrating these goals into business strategies and reporting transparently on progress to balance profit with purpose.

Bad faith

Intentional dishonest or deceptive behavior. Good governance ensures that actions and decisions are made in good faith, promoting transparency, integrity, and trust within the organization.

Bad-law jurisdiction

A term for regions with weak legal systems that may not enforce laws effectively. Effective corporate governance involves mitigating risks associated with operating in such jurisdictions through robust compliance and risk management strategies.

Bail-in

A financial mechanism where a failing company’s creditors and shareholders bear some of the losses by converting debt into equity. This governance tool helps stabilize the company without resorting to taxpayer-funded bailouts.

Bail-out

Financial support from the government to a failing company to prevent its collapse, often to protect the broader economy. Effective governance requires such interventions to be transparent and justified, with measures to prevent future dependency.

Bank bidding

The process by which banks compete for business opportunities or assets. Good governance ensures that bidding processes are transparent, fair, and aligned with regulatory standards.

Bank capital requirements

Regulatory standards that determine the minimum capital banks must hold to cover risks. Good governance ensures compliance with these requirements to maintain financial stability and protect stakeholders.

Bank regulation

Rules and standards set by authorities to ensure banks operate safely, soundly, and in the public interest. Governance in banking involves compliance with these regulations to mitigate risks and promote financial stability.

Bank resolution

The process of dealing with a failing bank to minimize impact on the economy. Effective governance involves planning and executing resolutions transparently and in alignment with regulatory requirements.

Bank run

A situation where many depositors withdraw their funds simultaneously due to fears of the bank's insolvency. Effective governance involves measures to prevent bank runs through transparency and maintaining depositor confidence.

Bank two-tier board

A governance structure with a supervisory board and a management board. Good governance ensures that both boards operate effectively, independently, and in alignment with regulatory requirements.

Bank-centered system

A financial system where banks play a central role in financial intermediation. Effective governance in such systems ensures transparency, risk management, and regulatory compliance to maintain stability.

Banking crises

Periods of severe financial instability in the banking sector. Effective governance involves managing risks and implementing strategies to prevent and mitigate the impact of banking crises.

Banking fragmentation

The division of the banking market into smaller, less connected segments. Good governance involves managing fragmentation to ensure financial stability and efficient market operations.

Banking union

An EU initiative aimed at centralizing banking supervision and resolution. Effective governance involves participating in the banking union to enhance stability and regulatory compliance.

Bankruptcy

A legal process for companies unable to meet their debt obligations, involving reorganization or liquidation. Governance during bankruptcy focuses on fair treatment of creditors and stakeholders, and the orderly restructuring or winding down of the company.

Banzhaf index

A measure of voting power in decision-making bodies. Effective governance uses the Banzhaf index to understand and balance the influence of different stakeholders in corporate decisions.

Basel

International banking regulations developed by the Basel Committee on Banking Supervision. Effective governance ensures compliance with Basel standards to enhance risk management and financial stability.

Basel II

Previous international banking regulations focused on risk management and capital adequacy. Effective governance involves maintaining compliance with Basel II while transitioning to newer standards.

Basel III

A set of international banking regulations aimed at improving bank capital requirements and risk management. Good governance involves ensuring compliance with Basel III to enhance financial stability.

Bayesian persuasion

A method of influencing beliefs using Bayesian probability. Effective governance involves using data-driven approaches like Bayesian persuasion to support informed decision-making and transparency.

Behavioral bias

Systematic deviations from rational decision-making. Good governance includes recognizing and mitigating behavioral biases to support objective and fair decision-making.

Behavioral decision research

The study of how psychological factors influence decisions. Effective governance uses insights from this research to improve decision-making processes and reduce biases.

Behavioral economics

The study of how psychological factors affect economic decisions. Good governance involves incorporating behavioral economics to understand and mitigate irrational behaviors in financial decisions.

Behavioral finance

Studies how psychological factors affect financial decision-making. In corporate governance, understanding these behaviors helps in designing policies and practices that mitigate irrational actions and align decisions with shareholders' interests.

Belief heterogeneity

Differences in beliefs among stakeholders. Good governance involves recognizing and addressing belief heterogeneity to ensure inclusive and balanced decision-making.

Benchmarking

Comparing performance against industry standards or best practices. Effective governance uses benchmarking to identify areas for improvement and implement best practices.

Beneficial ownership

The true ownership of shares or assets, often hidden behind nominees. Effective governance ensures transparency in disclosing beneficial ownership to protect stakeholders and prevent conflicts of interest.

Benefit corporation

A legal status for companies that balance profit with social and environmental goals. Good governance involves integrating these goals into business strategies and reporting transparently on progress.

Berle-Dodd debate

A discussion on whether corporations should focus solely on shareholder value or broader social responsibilities. Effective governance considers both perspectives to balance profit with social impact.

Berle-Means

Refers to the separation of ownership and control in corporations. Good governance addresses the challenges identified by Berle and Means by aligning management actions with shareholder interests.

Berle-Means corporation

A company characterized by the separation of ownership and control. Effective governance ensures that management acts in the best interests of shareholders despite this separation.

Bid/ask spread

The difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept. Effective governance involves ensuring transparent and fair trading practices to protect investor interests.

Bidding theory

The study of strategic behavior in bidding situations. Effective governance involves applying bidding theory to optimize outcomes in auctions and competitive negotiations.

Big four

The four largest accounting firms (Deloitte, PwC, EY, KPMG). Good governance involves selecting reputable firms from the Big 4 for audits to ensure high standards of transparency and accountability.

Big data

The vast volume of data generated by digital activities. In corporate governance, big data analytics enhances decision-making, risk management, and strategic planning by providing deeper insights into market trends and operational performance.

Big three

Refers to the three largest asset managers (BlackRock, Vanguard, State Street) and their influence on corporate governance through significant shareholdings, advocating for best practices, and engaging in shareholder activism to promote long-term value.

Bilateral trade

Trade agreements between two countries. Good governance ensures that bilateral trade is conducted transparently, ethically, and in compliance with international regulations.

Biodiversity

The variety of life in a particular habitat or ecosystem. Corporate governance includes integrating biodiversity considerations into environmental policies and sustainability initiatives to protect ecosystems.

Biodiversity finance

Funding initiatives aimed at conserving biodiversity. Effective governance involves managing biodiversity finance transparently and aligning with environmental goals and regulatory requirements.

Black-Scholes option pricing model

A mathematical model for valuing options. Good governance ensures that option pricing models are applied accurately and transparently to support fair and informed decision-making.

Blasius

A legal standard from the Blasius Industries, Inc. v. Atlas Corp. case, emphasizing the protection of shareholder voting rights. Good governance involves ensuring compliance with such legal standards to protect shareholder interests.

Blended finance

Combining public and private funding to achieve social or environmental goals. Effective governance involves managing blended finance transparently and ensuring alignment with strategic and ethical objectives.

Block holders

Large shareholders with significant influence over a company. Good governance ensures that block holders' actions align with the interests of all shareholders and promote long-term value creation.

Block pricing

The pricing of large blocks of shares. Effective governance involves ensuring that block pricing is transparent and fair, protecting the interests of all shareholders.

Block trades

Large transactions of securities negotiated privately. Good governance ensures that block trades are conducted transparently and align with regulatory requirements to protect market integrity.

Blockchain

A decentralized digital ledger technology that enhances transparency, security, and efficiency in recording transactions. In corporate governance, blockchain can improve accountability and traceability in areas like supply chain management and shareholder voting.

Blockholder

A shareholder with a significant block of shares. Effective governance ensures that blockholders act in the best interests of all shareholders and promote long-term value.

Blue sky laws

State securities laws designed to protect investors from fraud. Good governance ensures compliance with blue sky laws to maintain transparency and protect investor interests.

Board

The group of individuals elected by shareholders to oversee the management and operation of a company. The board ensures the company is run in the best interests of shareholders, setting strategic direction and monitoring performance.

Board committees

Sub-groups of the board responsible for specific areas, like audit or compensation. Good governance involves ensuring that board committees are independent, competent, and effective in their oversight roles.

Board composition

The mix of skills, experience, and diversity on the board. Good governance ensures that board composition supports effective oversight, decision-making, and strategic direction.

Board decision making

The process by which the board makes strategic and operational decisions. Effective governance involves ensuring that board decision-making is transparent, informed, and aligned with the company’s goals.

Board discretion

The authority of the board to make decisions on behalf of the company. Good governance ensures that board discretion is exercised ethically, transparently, and in the best interests of all stakeholders.

Board diversity

The inclusion of diverse members on the board. Effective governance involves promoting board diversity to enhance decision-making, represent different perspectives, and improve organizational performance.

Board dynamics

The interactions and relationships among board members. Good governance involves fostering positive board dynamics to ensure effective collaboration, decision-making, and oversight.

Board effectiveness

The ability of the board to fulfill its responsibilities effectively. Good governance involves evaluating and enhancing board effectiveness through training, performance assessments, and best practices.

Board elections

The process of selecting board members through shareholder voting. Effective governance ensures that board elections are transparent, fair, and allow shareholders to choose qualified and independent directors.

Board entrenchment

The tendency of board members to remain in position for extended periods, potentially resisting change. Good governance involves mechanisms to prevent entrenchment and ensure board refreshment.

Board evaluation

The assessment of board performance and effectiveness. Effective governance involves regular board evaluations to identify areas for improvement and ensure accountability.

Board expertise

The specialized knowledge and skills of board members. Good governance ensures that the board has the necessary expertise to provide effective oversight and strategic direction.

Board governance

The system by which the board operates and oversees the company. Effective governance involves establishing clear roles, responsibilities, and processes to ensure the board functions effectively and transparently.

Board independence

The presence of directors who are free from conflicts of interest. Good governance ensures that the board includes independent directors to provide unbiased oversight and protect stakeholder interests.

Board insulation

Measures to protect the board from external pressures. Effective governance balances board insulation with accountability, ensuring that the board can make independent decisions while remaining responsive to stakeholders.

Board interference

Undue influence on the board by external parties. Good governance involves protecting the board from interference to ensure independent and objective decision-making.

Board members liability

The legal responsibilities and potential risks faced by board members. Effective governance involves providing indemnification and insurance to protect board members while ensuring they fulfill their duties ethically and responsibly.

Board models

Different structures and frameworks for board governance. Effective governance involves selecting and implementing a board model that aligns with the company’s strategic goals and regulatory requirements.

Board networks

The connections and relationships between board members and external stakeholders. Effective governance involves leveraging board networks to enhance strategic insights and opportunities while managing potential conflicts of interest.

Board neutrality rule

A principle that the board should remain neutral in takeover situations. Good governance involves adhering to the neutrality rule to ensure fair and transparent decision-making during takeovers.

Board overlap

The occurrence of board members serving on multiple boards. Effective governance involves managing board overlap to prevent conflicts of interest and ensure focused oversight.

Bond markets

Multiple marketplaces for issuing and trading bonds. Good governance ensures that bond markets operate transparently, efficiently, and in compliance with regulatory standards.

Bond rollover

The process of replacing maturing bonds with new issuances. Good governance ensures that bond rollovers are managed transparently and strategically to maintain financial stability.

Bond spreads

The difference in yield between different bonds. Effective governance involves monitoring bond spreads to assess market conditions and inform strategic financial decisions.

Bondholders

Investors who hold bonds issued by a company or government. Good governance ensures that bondholders' interests are protected through transparent, ethical, and compliant financial practices.

Bonding hypothesis

A theory suggesting that companies commit to higher standards of governance to access global capital markets. Effective governance involves adhering to these standards to enhance credibility and investor confidence.

Bookbuilding

The process of generating and recording investor interest in a new securities issue. Effective governance ensures that bookbuilding is transparent, fair, and results in accurate pricing of the securities.

Bootstrap acquisitions

Acquisitions financed with minimal cash by leveraging the assets of the acquired company. Good governance ensures that such acquisitions are strategically sound and managed transparently.

Breakthrough rule

A regulation that allows shareholders to override certain protective measures during takeovers. Effective governance involves applying the breakthrough rule to ensure fair treatment of shareholders.

Breakup fee

A fee paid by one party to another if a merger or acquisition is not completed. Good governance ensures that breakup fees are reasonable, transparent, and protect the interests of all parties involved.

Bribery Act 2010

UK legislation aimed at preventing bribery and corruption. Good governance involves ensuring compliance with the Bribery Act 2010 to maintain ethical standards and protect the company’s reputation.

Broker non-vote

When a broker does not vote on certain proposals because they lack instructions from the beneficial owner. Effective governance ensures that broker non-votes are managed transparently and do not undermine shareholder democracy.

Broker voting

The process by which brokers vote on behalf of their clients. Good governance ensures that broker voting is conducted transparently and aligns with clients’ interests and instructions.

Brown-spinning

A term that may refer to questionable practices in financial markets. Effective governance involves identifying and mitigating such practices to ensure transparency and ethical conduct.

BRRD

Bank Recovery and Resolution Directive, an EU framework for managing bank failures. Good governance ensures compliance with BRRD to enhance financial stability and protect stakeholders.

Bunching analysis

A statistical method used to identify behavioral responses to tax or regulatory changes. Effective governance involves using bunching analysis to inform policy decisions and ensure compliance.

Bundling

The practice of selling multiple products or services together. Good governance ensures that bundling is conducted transparently and aligns with consumer protection regulations.

Business groups

Networks of firms under common control with complex ownership structures. Corporate governance in business groups focuses on ensuring transparency, managing conflicts of interest, and aligning the interests of the parent company and subsidiaries.

Business judgment rule

A legal principle protecting directors' decisions if made in good faith and with due care. Good governance involves ensuring that the board’s decisions comply with the business judgment rule to protect against legal liability.

Business restructuring

Reorganizing a company’s operations, structure, or finances. Effective governance involves managing restructuring processes transparently and strategically to enhance efficiency and achieve long-term goals.

Business Roundtable

An association of CEOs advocating for public policy. Effective governance involves engaging with such organizations to promote policies that enhance corporate responsibility and stakeholder interests.

Busy directors

Board members who serve on multiple boards. Effective governance involves managing the commitments of busy directors to ensure they can fulfill their responsibilities effectively.

But lucratif

French for "for-profit." Good governance involves ensuring that for-profit organizations operate transparently, ethically, and in alignment with their financial and strategic objectives.

Buyback

The repurchase of a company’s own shares. Effective governance ensures that buybacks are conducted transparently and strategically to enhance shareholder value and maintain financial health.

Buyout funds

Investment funds that acquire companies or significant stakes. Effective governance involves managing buyout funds transparently and aligning their actions with long-term value creation.

Buyouts

Acquisition of a company or its controlling stake, often involving significant changes in management and strategy. Corporate governance ensures that buyouts are conducted fairly, transparently, and in the best interests of all shareholders.

Bylaw

A rule governing the internal affairs of an organization. Good governance involves ensuring that bylaws are clear, comprehensive, and aligned with the company’s strategic objectives and regulatory requirements.

C

Cadbury Code

A set of corporate governance guidelines introduced in the UK in 1992. Effective governance involves adopting the principles of the Cadbury Code, such as board independence and transparency, to enhance accountability and protect shareholder interests.

Caparo

A landmark UK case (Caparo Industries plc v Dickman) that established a three-part test for duty of care in negligence claims. Good governance involves ensuring compliance with legal principles established by such cases to protect stakeholder interests.

Capital Adequacy

The requirement for banks to hold sufficient capital to cover risks. Effective governance ensures compliance with capital adequacy standards to maintain financial stability and protect depositors and investors.

Capital Allocation

The process of distributing financial resources within a company. Good governance involves making capital allocation decisions transparently and strategically to maximize shareholder value and support sustainable growth.

Capital Allocation Efficiency

The effectiveness with which a company uses its financial resources. Good governance ensures that capital allocation is done efficiently to maximize returns and support long-term strategic objectives.

Capital and Labor Allocation

The distribution of financial and human resources within an organization. Effective governance ensures that both capital and labor are allocated efficiently to enhance productivity and achieve strategic goals.

Capital Asset Pricing Model (CAPM)

A model used to determine the expected return on an asset based on its risk relative to the market. Effective governance involves using CAPM to make informed investment decisions and manage risk.

Capital Channel

The process through which changes in capital influence economic activity. Good governance involves managing capital channels effectively to support economic stability and growth.

Capital Expenditures

Investments in physical assets like buildings and machinery. Good governance ensures that capital expenditures are made strategically and transparently to support long-term growth and value creation.

Capital Flows

Movements of capital between countries or markets. Effective governance involves managing capital flows transparently and in compliance with regulatory requirements to support economic stability and growth.

Capital Irreversibility

The difficulty of reversing capital investments once made. Effective governance involves careful planning and analysis to ensure that capital investments are aligned with long-term strategic objectives.

Capital Maintenance

The principle that a company should maintain its capital base and not distribute more than its profits. Good governance involves ensuring compliance with capital maintenance requirements to protect shareholders and creditors.

Capital Market Law

Legal frameworks governing financial markets where securities are traded. Effective governance involves ensuring compliance with capital market laws to maintain transparency, fairness, and investor protection.

Capital Market Reform

Changes aimed at improving the efficiency and transparency of financial markets. Good governance involves supporting and implementing reforms to enhance market integrity and protect investors.

Capital Market Regulation

Rules governing the operation of financial markets. Effective governance ensures compliance with these regulations to maintain market integrity, transparency, and investor protection.

Capital Market Union

An EU initiative to create a single market for capital across member states. Good governance involves aligning with the goals of the Capital Market Union to enhance market efficiency and integration.

Capital Misallocation

Inefficient distribution of capital resources. Effective governance involves ensuring that capital is allocated strategically and transparently to maximize returns and support sustainable growth.

Capital Structure

The mix of debt and equity financing used by a company. Good governance involves managing capital structure strategically to optimize cost of capital and support long-term growth.

Capitalism

An economic system based on private ownership and free markets. Effective corporate governance within capitalism involves ensuring transparency, accountability, and ethical conduct to protect stakeholders and promote sustainable growth.

CAPM

Capital Asset Pricing Model, used to determine the expected return on an investment. Good governance involves using CAPM to inform investment decisions and manage financial risk effectively.

Caps on Pay

Limits on executive compensation. Effective governance involves implementing caps on pay to align executive incentives with company performance and stakeholder interests.

Carbon Budget

The allowable amount of carbon dioxide emissions to limit global warming. Effective governance involves managing and adhering to a carbon budget to support environmental sustainability and regulatory compliance.

Carbon Decarbonization

The process of reducing carbon emissions. Good governance involves implementing strategies for carbon decarbonization to mitigate environmental impact and comply with regulations.

Carbon emissions

Greenhouse gases released by corporate activities. Governance involves implementing policies to reduce emissions, comply with environmental regulations, and address climate-related risks, demonstrating corporate responsibility and sustainability.

Carbon Offsets

Credits purchased to compensate for carbon emissions. Effective governance involves using carbon offsets transparently and strategically to support sustainability goals.

Carbon Premium

The additional cost associated with carbon-intensive activities. Good governance involves managing carbon premiums by investing in sustainable practices and technologies to reduce emissions.

Carbon Taxation

Taxes imposed on carbon emissions to incentivize reduction. Effective governance involves ensuring compliance with carbon taxation laws and integrating them into the company’s sustainability strategy.

Caremark

A legal standard for director oversight of corporate compliance programs. Good governance involves ensuring that directors fulfill their Caremark duties to maintain compliance and protect stakeholder interests.

CARES Act

U.S. legislation providing economic relief during the COVID-19 pandemic. Effective governance involves ensuring compliance with CARES Act provisions and transparently managing received funds to support recovery efforts.

Cartesio

A European Court of Justice case impacting company mobility within the EU. Good governance involves understanding and complying with legal precedents set by such cases to ensure compliance and protect stakeholder interests.

Case Law

Legal principles established through judicial decisions. Effective governance involves staying informed about relevant case law to ensure compliance and inform decision-making.

Cash Flow Rights

Entitlements to a portion of a company's cash flows. Effective governance involves ensuring that cash flow rights are clearly defined and respected to protect investor interests.

Cash Flows

The inflows and outflows of cash in a business. Good governance involves managing cash flows to maintain liquidity, support operations, and invest in growth opportunities.

Cash-Equity Offers

Proposals to acquire a company using a combination of cash and stock. Good governance involves evaluating and executing cash-equity offers transparently and in alignment with strategic goals.

Causal Channels

Pathways through which causal effects occur. Good governance involves understanding and managing causal channels to ensure effective implementation of policies and strategies.

Causality in Empirical Research

The study of cause-and-effect relationships using data. Good governance involves applying rigorous methods to establish causality and inform evidence-based decision-making.

Causation

The relationship between cause and effect. Effective governance involves understanding causation to ensure that strategies and decisions lead to desired outcomes.

CD&A Disclosures

Compensation Discussion and Analysis, a section in proxy statements detailing executive compensation. Good governance involves ensuring that CD&A disclosures are transparent and align with regulatory requirements and stakeholder interests.

Central Bank Digital Currency

Central Bank Digital Currency, a digital form of central bank money. Good governance involves understanding and adapting to the implications of CBDC for financial stability and regulatory compliance.

Central Banks

Institutions responsible for managing a country's currency and monetary policy. Good governance involves engaging with central banks to ensure compliance with monetary regulations and support economic stability.

Central Clearing

The process of clearing and settling trades through a central counterparty. Effective governance involves ensuring that central clearing is conducted transparently and in compliance with regulatory standards to mitigate risk.

Central Securities Depository

Institutions that hold securities and facilitate their transfer. Good governance involves ensuring that securities depositories operate transparently and securely to protect investor interests.

Centralized Decision-Making

A governance structure where decision-making authority is concentrated at the top. Effective governance involves balancing centralized decision-making with input from relevant stakeholders to ensure informed and strategic decisions.

Centro Litigation

A legal case concerning directors' duties in Australia. Good governance involves understanding and applying lessons from such cases to ensure compliance and protect stakeholder interests.

Centros

A European Court of Justice case impacting company mobility within the EU. Good governance involves understanding and complying with legal precedents set by such cases to ensure compliance and protect stakeholder interests.

CEO Compensation / Remuneration

The remuneration received by the CEO. Effective governance ensures that CEO compensation is aligned with performance, transparent, and designed to incentivize long-term value creation.

CEO Duality

The situation where the CEO also serves as the chair of the board. Good governance involves assessing the implications of CEO duality and implementing structures to ensure effective oversight and accountability.

CEO incentives

Compensation structures designed to align the CEO's interests with those of shareholders. Effective governance ensures these incentives promote long-term value creation, ethical behavior, and risk management.

CEO Labor Markets

The job market for CEOs. Good governance involves understanding CEO labor markets to attract and retain top talent and ensure competitive and fair compensation practices.

CEO Succession

The process of transitioning from one CEO to another. Effective governance involves ensuring that CEO succession is planned transparently and strategically to maintain stability and continuity.

CEO Tenure

The length of time a CEO serves in their role. Good governance involves balancing CEO tenure to ensure effective leadership and avoid entrenchment.

CFPB

Consumer Financial Protection Bureau, a U.S. agency overseeing financial consumer protection. Effective governance involves ensuring compliance with CFPB regulations to protect consumers and maintain trust.

CFTC

Commodity Futures Trading Commission, a U.S. agency regulating derivatives markets. Good governance involves ensuring compliance with CFTC regulations to maintain market integrity and protect investors.

Chaebol

Large South Korean conglomerates. Effective governance involves ensuring that chaebols operate transparently, manage conflicts of interest, and align with strategic goals and regulatory standards.

Chair of the Board

The leader of the board of directors. Good governance involves ensuring that the chair provides effective leadership, facilitates board meetings, and aligns board actions with strategic goals.

Chapter 11

A section of the U.S. Bankruptcy Code allowing for reorganization of a debtor's business affairs and assets. Corporate governance during Chapter 11 focuses on restructuring efforts to maximize value for creditors and stakeholders while maintaining operations.

Chapter 15

A section of the U.S. Bankruptcy Code dealing with cross-border insolvencies. Effective governance involves ensuring compliance with Chapter 15 to manage international insolvencies transparently and protect stakeholder interests.

Charter Amendments

Changes to a company’s charter. Effective governance involves ensuring that charter amendments are made transparently, with proper approval, and align with strategic goals and legal requirements.

Charter Competition

The competition between jurisdictions to attract corporate charters. Good governance involves understanding the implications of charter competition and choosing jurisdictions that align with the company’s strategic goals and regulatory needs.

Charters

Legal documents establishing a company and outlining its structure and governance. Effective governance involves ensuring that charters are comprehensive, clear, and aligned with regulatory requirements and strategic goals.

Chief Compliance Officer

An executive responsible for overseeing compliance with laws and regulations. Effective governance involves ensuring that the Chief Compliance Officer has the authority and resources to maintain compliance and ethical standards.

Chief Executive Officers

(Repeated) The highest-ranking executives in companies. Effective governance involves ensuring that CEOs’ actions align with strategic goals and stakeholder interests.

Chinese Walls

Information barriers within organizations to prevent conflicts of interest. Effective governance involves implementing and maintaining Chinese walls to ensure ethical conduct and compliance.

Circularity

The concept of circular economy in corporate governance involves designing business practices that minimize waste, recycle resources, and promote sustainability, ensuring long-term environmental and economic benefits.

Citizens United

A U.S. Supreme Court case that allowed unlimited corporate spending on political campaigns. Effective governance involves ensuring that corporate political spending is transparent and aligned with shareholder interests.

Civil and Criminal Liability of Bank Directors

Legal responsibilities of bank directors for their actions. Good governance involves ensuring that bank directors understand and comply with their legal duties to protect stakeholders and the financial system.

Civil Damages

Monetary compensation awarded in civil lawsuits. Effective governance involves managing and mitigating the risks of civil damages through compliance and ethical practices.

Civil Liability

Legal responsibility for actions or omissions that cause harm. Good governance involves ensuring that companies comply with legal standards to avoid civil liability and protect stakeholder interests.

Civil procedure

The body of law governing legal proceedings in civil cases. In corporate governance, it ensures disputes are resolved fairly and efficiently, protecting stakeholders' rights and maintaining trust in the legal system.

Classified (Staggered) Boards

Boards with directors serving staggered terms. Good governance involves evaluating the impact of classified boards on accountability and implementing structures to ensure effective oversight.

Classified Board

A board structure where directors serve staggered terms. Effective governance involves ensuring that classified boards enhance stability and long-term planning while maintaining accountability to shareholders.

Clause 49

A clause in Indian corporate governance regulations requiring companies to comply with certain governance standards. Good governance involves ensuring compliance with Clause 49 to enhance transparency and accountability.

Clawback

The recovery of previously paid compensation or funds. Good governance involves ensuring that clawback provisions are enforced to align executive incentives with long-term performance and ethical standards.

Clearing House

An intermediary that facilitates the settlement of trades. Effective governance involves ensuring that clearing houses operate transparently and securely to protect market integrity and reduce counterparty risk.

Climate Disclosure

Reporting on a company’s environmental impact and climate-related risks. Effective governance involves ensuring that climate disclosures are accurate, transparent, and aligned with regulatory requirements.

Climate Finance

Funding aimed at mitigating climate change and supporting adaptation. Good governance involves managing climate finance transparently and strategically to achieve environmental goals.

Climate Patents

Intellectual property related to climate technologies. Effective governance involves managing climate patents to support innovation and sustainability goals.

Climate Policy

Regulations and initiatives aimed at addressing climate change. Good governance involves ensuring compliance with climate policy and integrating it into strategic planning to promote sustainability.

Climate Regulation

Laws and rules aimed at reducing greenhouse gas emissions and mitigating climate change. Effective governance involves ensuring compliance with climate regulations and integrating them into business practices.

Climate risks

Various threats posed by climate change, including physical, transition, and liability risks. Corporate governance involves identifying, disclosing, and managing these risks to protect the company's financial health and reputation.

CLO

Collateralized Loan Obligation, a type of structured financial product. Effective governance involves managing CLOs transparently and ensuring they align with strategic goals and risk management practices.

Close Corporations

Privately held companies with a small number of shareholders. Good governance involves ensuring transparency, fairness, and compliance with regulations in close corporations.

Closed-End Fund Puzzle

The phenomenon where closed-end fund shares trade at prices different from their net asset value. Effective governance involves managing closed-end funds transparently to protect investor interests.

Closely Held Firms

Companies owned by a small group of shareholders. Good governance involves ensuring that closely held firms operate transparently, fairly, and in alignment with strategic goals.

Cluster-Robust Inference

Statistical methods that account for clustering in data. Effective governance involves using robust inference techniques to inform decision-making and ensure accurate analysis.

Co-CEO Structures

Governance structures with two individuals sharing the CEO role. Effective governance involves ensuring that co-CEO structures promote collaboration, clear division of responsibilities, and strategic alignment.

Co-Creation

Collaborative creation of value by companies and stakeholders. Good governance involves facilitating co-creation to enhance innovation, stakeholder engagement, and value creation.

Co-Determination

A governance model where employees have representation on the board. Effective governance involves ensuring that co-determination promotes collaboration, transparency, and alignment with strategic goals.

Co-Investment Rights

The right of existing investors to participate in new financing rounds. Good governance involves ensuring that co-investment rights are transparently managed and aligned with investor interests.

Coase's Theorem

An economic theory stating that private negotiations can resolve externalities if property rights are well-defined. Good governance involves applying Coase's theorem to manage externalities and promote efficient outcomes.

CoCos

Contingent Convertible Bonds, debt instruments that convert into equity under certain conditions. Effective governance involves managing CoCos transparently and ensuring they align with strategic and risk management goals.

Code of Conduct

Guidelines outlining expected behaviors and practices. Good governance involves ensuring that a code of conduct is clearly communicated, enforced, and aligned with ethical standards and strategic goals.

Codes

Sets of guidelines or principles for corporate governance. Effective governance involves adhering to relevant codes to ensure transparency, accountability, and best practices.

Codetermination

A governance practice where employees participate in management decisions, typically through representation on the board. This promotes stakeholder engagement, improves decision-making, and aligns company policies with employee interests.

Codification

The process of consolidating and organizing laws or rules into a systematic code. Good governance involves ensuring that codification efforts enhance clarity, compliance, and accessibility.

Coefficient of Variation

A statistical measure of relative variability. Good governance involves using the coefficient of variation to assess and manage financial and operational risks.

Coevolution

The process of mutual adaptation between entities. Effective governance involves facilitating coevolution between the company and its stakeholders to enhance collaboration and strategic alignment.

Cognitive Conflict

Disagreements arising from differences in perspective or knowledge. Effective governance involves managing cognitive conflict to ensure that diverse viewpoints are considered and that decision-making is robust.

Coinsurance

Shared risk coverage between parties. Good governance involves managing coinsurance arrangements transparently and ensuring they align with strategic and risk management objectives.

Collaborative Agreements

Contracts outlining cooperative efforts between parties. Good governance involves ensuring that collaborative agreements are transparent, fair, and aligned with strategic goals.

Collaborative Insider-Shareholder Model

A governance framework promoting cooperation between insiders and shareholders. Effective governance involves implementing this model to enhance alignment and protect stakeholder interests.

Collateralized Loan Obligation

A structured financial product backed by a pool of loans. Good governance involves managing CLOs transparently and ensuring they align with strategic and risk management goals.

Collective action

Efforts by shareholders or stakeholders to achieve common goals, such as influencing corporate policies. Effective governance structures facilitate collective action by ensuring transparency, communication, and responsiveness to stakeholder concerns.

Collective Action Clauses

Provisions in bond contracts that allow a majority of bondholders to agree on changes. Effective governance involves ensuring that collective action clauses are used transparently to facilitate efficient debt restructuring.

Collective Conservatism

A tendency for groups to resist change. Good governance involves managing collective conservatism to ensure that the company remains adaptable and responsive to new opportunities and challenges.

Comment Letters

Written submissions by stakeholders to regulatory bodies regarding proposed rules. Good governance involves participating in the comment letter process to influence regulatory developments and ensure that stakeholder interests are represented.

Common Investors

Shareholders who invest in multiple companies within a sector or market. Effective governance involves ensuring that common investors’ interests are considered and protected through transparent and fair practices.

Common ownership

When large investors hold significant stakes in multiple competing firms. Corporate governance addresses potential conflicts of interest and ensures that common ownership does not harm competition or shareholder value.

Common Shareholding

Ownership of common shares in a company. Good governance involves ensuring that the rights and interests of common shareholders are protected through transparent and fair practices.

Company and Securities Law

Legal frameworks governing the operation of companies and the trading of securities. Effective governance involves ensuring compliance with these laws to protect stakeholders and maintain market integrity.

Company Disclosure

The provision of information about a company’s operations, financial performance, and governance. Good governance involves ensuring that disclosures are accurate, timely, and transparent to inform stakeholders and support decision-making.

Company's Freedom of Establishment

The right of companies to set up operations in any EU member state. Effective governance involves understanding and leveraging this freedom to support strategic goals and market expansion.

Compensating Differentials

Wage differences that compensate workers for job characteristics. Good governance involves ensuring that compensating differentials are fair, transparent, and aligned with market standards.

Compensation Benchmarking

The process of comparing compensation levels to market standards. Effective governance involves using compensation benchmarking to ensure that pay structures are competitive, fair, and aligned with strategic goals.

Compensation Contracting

The creation of agreements outlining compensation terms. Good governance involves ensuring that compensation contracts are transparent, fair, and aligned with performance and strategic objectives.

Compensation for Unsecured Creditors

Payments made to creditors without collateral. Good governance involves ensuring that compensation for unsecured creditors is managed transparently and in compliance with legal requirements.

Compensation Mechanism

The methods and structures used to determine and distribute pay. Good governance involves ensuring that compensation mechanisms are transparent, fair, and aligned with performance and strategic objectives.

Compensation Structures

The design and organization of pay systems. Effective governance involves ensuring that compensation structures are transparent, fair, and aligned with strategic goals and performance.

Competition Law

Regulations designed to promote fair competition and prevent anti-competitive practices. Effective governance involves ensuring compliance with competition law to protect market integrity and stakeholder interests.

Compliance Governance

The system by which compliance with laws and regulations is managed. Effective governance involves implementing robust compliance governance to ensure transparency, accountability, and regulatory adherence.

Comply or Explain

A corporate governance approach requiring companies to either comply with standards or explain deviations. Good governance involves adhering to this approach to ensure transparency and accountability.

Concealed Distributions

Hidden payments or benefits not disclosed to stakeholders. Good governance involves ensuring transparency and preventing concealed distributions to maintain trust and compliance.

Concentrated ownership

When a small number of shareholders hold significant control over a company. Governance challenges include managing potential conflicts of interest and ensuring that minority shareholders' rights are protected.

Conduct Rules

Regulations governing behavior in financial markets. Good governance involves ensuring compliance with conduct rules to maintain market integrity and protect investors.

Conflict of Interest

(Repeated) Situations where personal interests may conflict with professional duties. Good governance involves identifying and managing conflicts of interest to ensure that decisions are made in the best interests of the company and stakeholders.

Conglomerate

A large corporation consisting of diverse businesses. Effective governance involves ensuring that conglomerates operate transparently, manage risks effectively, and align with strategic goals.

Conglomerate Discount

The tendency for the market to undervalue diversified companies. Good governance involves managing conglomerate structures to enhance transparency and value recognition.

Consob

Italy's securities market regulator. Effective governance involves ensuring compliance with Consob regulations to maintain market integrity and protect investors.

Constituency Directors

Board members representing specific stakeholder groups. Effective governance involves ensuring that constituency directors advocate for their groups while aligning with the company’s strategic goals.

Construct Validity

The degree to which a test measures what it claims to measure. Good governance involves ensuring that measures and metrics used in decision-making are valid and reliable.

Contestability of Corporate Control

The ease with which control of a company can be challenged. Good governance involves ensuring that control is contestable to promote accountability and protect shareholder interests.

Contingent Value Rights

Securities giving the holder the right to receive additional value if certain conditions are met. Effective governance involves managing these rights transparently and ensuring they align with strategic goals.

Continuation Funds

Funds created to continue the investment strategy of an existing fund. Good governance involves managing continuation funds transparently and ensuring they align with investor interests and strategic goals.

Continuous Disclosure

The requirement for companies to provide ongoing updates on significant events. Effective governance involves ensuring that continuous disclosure is maintained to inform stakeholders and comply with regulatory requirements.

Contract theory

A framework for understanding agreements between parties. In corporate governance, it helps design executive contracts and incentive structures that align with the company's goals and minimize agency costs.

Contractual Convergence

The alignment of contract terms across different jurisdictions. Effective governance involves ensuring that contractual convergence promotes transparency, fairness, and compliance with legal standards.

Contractual Debt

Debt obligations defined by contractual agreements. Good governance involves managing contractual debt transparently and ensuring that it aligns with strategic and financial goals.

Contractual Enforcement

The process of ensuring compliance with contract terms. Effective governance involves implementing mechanisms for contractual enforcement to protect stakeholder interests and maintain legal standards.

Control Contests

Battles for corporate control, often during takeovers. Good governance involves managing control contests transparently and ensuring that shareholder interests are protected.

Control Enhancing Devices

Mechanisms used to increase the control of certain stakeholders. Effective governance involves ensuring that these devices are transparent and aligned with the interests of all stakeholders.

Control Premium

The additional value that a buyer is willing to pay for control of a company. Good governance involves ensuring that control premiums are justified and aligned with shareholder interests.

Control Rights

The legal entitlements allowing stakeholders to influence company decisions. Effective governance involves ensuring that control rights are respected and balanced to protect all stakeholder interests.

Control Structure

The framework of authority within an organization. Good governance involves designing and maintaining control structures that promote transparency, accountability, and strategic alignment.

Control Transactions

Deals involving the transfer of control of a company. Effective governance involves managing control transactions transparently and ensuring that they align with strategic goals and protect stakeholder interests.

Control Wedge

The disparity between voting control and cash flow rights. Good governance involves managing control wedges to ensure fair and transparent decision-making and protect stakeholder interests.

Control-Enhancement

Mechanisms that increase the influence of certain stakeholders. Effective governance involves ensuring that control-enhancement mechanisms are transparent and align with the interests of all stakeholders.

Control-Enhancing Mechanisms

(Repeated) Devices that increase the influence of certain stakeholders. Effective governance involves ensuring that control-enhancing mechanisms are transparent and align with the interests of all stakeholders.

Controlled Firms

Companies with a dominant shareholder or group of shareholders. Good governance involves ensuring that the interests of minority shareholders are protected and that the company operates transparently and fairly.

Controlling Family Shareholder

A family with significant influence over a company. Effective governance involves managing the interests of controlling family shareholders to ensure transparency, fairness, and alignment with strategic goals.

Controlling Minority Shareholders

Stakeholders with significant influence despite holding a minority of shares. Good governance involves ensuring that their influence is balanced and that the interests of all shareholders are protected.

Controlling Ownership

The possession of significant influence over a company’s operations. Effective governance involves ensuring that controlling ownership is exercised transparently, ethically, and in alignment with strategic goals.

Controlling shareholder

A shareholder with significant influence over a company's decisions. Governance mechanisms ensure that the controlling shareholder's actions align with the interests of all shareholders and do not exploit minority shareholders.

Controlling Shareholder Squeeze-Outs

Transactions where controlling shareholders buy out minority shareholders. Good governance involves ensuring that these transactions are fair, transparent, and protect the interests of all shareholders.

Conversion Rights

The ability to convert securities into other forms, such as shares. Effective governance involves ensuring that conversion rights are managed transparently and align with strategic goals and stakeholder interests.

Convertible Contingent Capital Securities

Debt instruments that convert to equity under certain conditions. Good governance involves managing these securities transparently and ensuring they align with strategic and risk management goals.

Convertible Preferred Stocks

Preferred shares that can be converted into common shares. Effective governance involves managing these conversions transparently and ensuring they align with strategic goals and protect shareholder interests.

Coordinated Effects

The impact of coordinated actions by companies or stakeholders. Effective governance involves managing coordinated effects to ensure fair competition and protect stakeholder interests.

Coordination Failure

The inability to achieve efficient outcomes due to lack of coordination. Effective governance involves implementing mechanisms to prevent coordination failures and ensure strategic goals are met.

Corporate Accountability

The responsibility of companies to their stakeholders. Effective governance involves ensuring that companies are accountable for their actions and transparent in their operations.

Corporate Ballot

The process of voting on corporate matters. Good governance involves ensuring that the corporate ballot process is transparent, fair, and allows shareholders to exercise their rights effectively.

Corporate Boards

Groups of individuals elected to oversee the management of a company. Effective governance involves ensuring that corporate boards are composed of qualified, independent members who prioritize transparency and accountability.

Corporate Bond Market

The marketplace for issuing and trading corporate bonds. Effective governance involves ensuring that the corporate bond market operates transparently and fairly to protect investors.

Corporate Bylaws

Rules governing the internal management of a company. Effective governance involves ensuring that bylaws are clear, comprehensive, and aligned with strategic goals and regulatory requirements.

Corporate Charter

A legal document that establishes a corporation and outlines its structure and governance. Effective governance involves ensuring that the corporate charter is clear, comprehensive, and aligned with strategic goals and regulatory requirements.

Corporate Charters & Bylaws

Legal documents governing a company's structure and internal rules. Good governance involves ensuring that charters and bylaws are clear, comprehensive, and aligned with strategic goals and regulatory requirements.

Corporate Citizenship

The responsibilities of a company to act ethically and contribute positively to society. Effective governance involves promoting corporate citizenship through transparency, social responsibility, and sustainable practices.

Corporate Compliance

Adherence to laws, regulations, and internal policies. Effective governance involves implementing robust compliance programs to ensure that the company operates transparently and ethically.

Corporate Elections

The process of voting on corporate matters, such as electing directors. Good governance involves ensuring that corporate elections are transparent, fair, and allow shareholders to exercise their rights effectively.

Corporate Fraud

Deceptive practices by a company or its representatives. Effective governance involves implementing measures to prevent corporate fraud and ensure that the company operates ethically and transparently.

Corporate Governance

The system by which companies are directed and controlled. Effective governance involves ensuring transparency, accountability, and ethical conduct to protect stakeholder interests and promote sustainable growth.

Corporate Governance Index

A measure of a company’s adherence to governance best practices. Effective governance involves striving to achieve high scores on governance indices to demonstrate transparency and accountability.

Corporate Group

A collection of related companies under common control. Good governance involves ensuring that corporate groups operate transparently, manage conflicts of interest, and align with strategic goals.

Corporate Insolvency Law

Legal frameworks governing the insolvency process. Effective governance involves ensuring compliance with insolvency laws to manage financial distress transparently and protect stakeholder interests.

Corporate Mobility

The ability of companies to relocate or operate across jurisdictions. Effective governance involves managing corporate mobility to optimize strategic advantages and ensure compliance with legal requirements.

Corporate Opportunity Waivers

Agreements allowing directors to pursue personal business opportunities. Good governance involves ensuring that these waivers are transparent, fair, and aligned with the company’s interests.

Corporate Ownership

The possession of shares in a company. Good governance involves managing corporate ownership to ensure transparency, fairness, and alignment with strategic goals.

Corporate Reporting

The provision of information about a company’s operations, financial performance, and governance. Good governance involves ensuring that reports are accurate, timely, and transparent to inform stakeholders and support decision-making.

Corporate Social Purpose

The commitment of a company to social and environmental goals. Good governance involves integrating social purpose into business strategies and reporting transparently on progress.

Corporate social responsibility

Companies' efforts to contribute to societal goals beyond profit-making. Effective governance integrates CSR into business strategies, ensuring ethical conduct and positive social impact.

Corporate Sustainability

The commitment of a company to operate in an environmentally and socially responsible manner. Effective governance involves integrating sustainability into business strategies and reporting transparently on progress.

Corporate Takeover Market

The marketplace for mergers and acquisitions. Good governance involves ensuring that takeovers are conducted transparently and in the best interests of shareholders and stakeholders.

Correlated Topic Model

A statistical model for discovering topics in a collection of documents. Effective governance involves using correlated topic models to gain insights from communications and inform decision-making.

Correlated Trading

The tendency of securities to move together in response to market conditions. Good governance involves understanding and managing correlated trading to inform investment decisions and risk management.

Correspondence Analysis

A statistical technique for visualizing relationships in data. Effective governance involves using correspondence analysis to inform decision-making and strategic planning.

CORSIA

Carbon Offsetting and Reduction Scheme for International Aviation. Good governance involves ensuring compliance with CORSIA to reduce carbon emissions and promote sustainability in aviation.

Corwin

A legal principle protecting board decisions if approved by informed, disinterested shareholders. Effective governance involves ensuring compliance with Corwin standards to protect shareholder interests and maintain transparency.

COSO

Committee of Sponsoring Organizations of the Treadway Commission, which provides frameworks for risk management. Good governance involves adopting COSO frameworks to enhance internal controls and risk management practices.

Covariate Balance

The equivalence of covariates in treatment and control groups in an experiment. Effective governance involves ensuring covariate balance to enhance the validity and reliability of empirical research.

Covered Bonds

Debt securities backed by a pool of assets. Good governance involves managing covered bonds transparently and ensuring they align with strategic goals and risk management practices.

COVID-19 crisis

The economic and operational disruptions caused by the pandemic. Corporate governance has had to adapt rapidly, focusing on resilience, risk management, and stakeholder engagement to navigate the crisis.

Crash Risk

The potential for a sudden and severe decline in asset prices. Good governance involves managing crash risk through strategic planning, risk assessment, and mitigation measures.

CRD IV

Capital Requirements Directive IV, an EU regulation governing capital adequacy for banks. Effective governance involves ensuring compliance with CRD IV to maintain financial stability and protect stakeholder interests.

Credit Crisis

A severe disruption in the availability of credit. Effective governance involves managing the impacts of credit crises through strategic planning and risk mitigation to protect stakeholder interests.

Credit Rating

An assessment of the creditworthiness of a borrower. Effective governance involves ensuring that credit ratings are accurate, transparent, and reflect the company’s financial stability.

Creeping Acquisition

The gradual purchase of a company’s shares to gain control. Effective governance involves managing creeping acquisitions transparently and ensuring they align with strategic goals and protect shareholder interests.

Critical Mass Theory

The idea that certain outcomes are achieved once a sufficient threshold is reached. Good governance involves understanding and leveraging critical mass theory to drive strategic initiatives and value creation.

Cross Border Mergers and Acquisitions

M&As involving companies from different countries. Good governance involves managing cross-border transactions transparently and ensuring compliance with international regulations to protect stakeholder interests.

Cross Listing

The listing of a company’s shares on multiple stock exchanges. Effective governance involves managing cross listings transparently and ensuring they align with strategic goals and regulatory requirements.

Cross Ownership

The holding of shares in one company by another. Good governance involves managing cross ownership transparently and ensuring it aligns with strategic goals and protects stakeholder interests.

Cross-listing

Listing a company's shares on multiple stock exchanges. Governance practices ensure compliance with regulations in different jurisdictions, enhancing visibility and access to global capital.

Cross-Listing Waves

Periods when many companies list shares on multiple stock exchanges. Good governance involves managing cross-listings transparently and ensuring they align with strategic goals and regulatory requirements.

Cross-Sectional Smoothing

The practice of smoothing income or performance across different divisions or periods. Effective governance involves ensuring that cross-sectional smoothing is transparent and does not mislead stakeholders.

Crowdfunding

Raising capital through small contributions from a large number of people. Effective governance involves ensuring that crowdfunding campaigns are transparent, fair, and compliant with regulatory standards.

Cryptocurrency

Digital currency using cryptography for security. Effective governance involves managing cryptocurrency assets transparently and ensuring compliance with regulatory standards to protect stakeholder interests.

CSDDD

Corporate Sustainability Due Diligence Directive, an EU regulation for sustainable business practices. Effective governance involves ensuring compliance with CSDDD to promote sustainability and protect stakeholder interests.

CSR

Corporate Social Responsibility involves companies taking responsibility for their impact on society and the environment. Good governance integrates CSR into business strategies, promoting sustainability and ethical conduct.

CSRD

Corporate Sustainability Reporting Directive, an EU regulation for sustainability disclosures. Effective governance involves ensuring compliance with CSRD to promote transparency and sustainability in business practices.

Culture

The shared values and behaviors within an organization. Effective governance fosters a positive corporate culture that promotes ethical behavior, accountability, and long-term success.

Cumulative Voting

A voting system that allows shareholders to allocate votes proportionally. Good governance involves ensuring that cumulative voting is conducted transparently and aligns with shareholder interests.

Cybersecurity

Measures taken to protect computer systems from cyber threats. Effective governance involves ensuring that cybersecurity practices are robust, transparent, and aligned with regulatory standards to protect stakeholder interests.

D

Dark Pools

Private exchanges for trading securities, allowing large transactions without revealing details to the public. In corporate governance, dark pools raise concerns about transparency and fairness, as they can obscure the true market value and affect investor confidence.

Data Governance

The management of data availability, usability, integrity, and security. Good governance involves establishing clear policies and procedures for data governance to ensure compliance, protect privacy, and support decision-making.

De-SPACs

The process of a Special Purpose Acquisition Company (SPAC) merging with a target company to take it public. Governance challenges include ensuring transparency, protecting shareholder interests, and complying with regulatory requirements during the transition.

Dead-Weight Loss

Economic inefficiency resulting from market distortions, such as taxes or monopolies. In governance, minimizing dead-weight loss involves promoting fair competition and efficient resource allocation to enhance overall economic welfare.

Deal Completion Rates

The percentage of initiated deals that successfully close. Governance focuses on improving deal completion rates through thorough due diligence, clear communication, and risk management to achieve strategic goals.

Deal Premium

The additional price paid by an acquirer over the target company’s market value. Effective governance involves ensuring that the deal premium is justified, transparent, and aligns with shareholder interests.

Dealer of Last Resort

A central bank or financial institution that provides liquidity in times of crisis. Effective governance involves ensuring that such interventions are transparent, ethical, and aimed at maintaining financial stability.

Debt Decoupling

The separation of debt ownership from the associated risks or control rights. Governance challenges include ensuring transparency and protecting stakeholder interests in such complex financial arrangements.

Debt Financing

Raising capital through borrowing. Effective governance involves managing debt financing strategically to support growth while maintaining financial stability and protecting stakeholder interests.

Debt Forgiveness

The cancellation of a borrower’s debt obligations. Good governance involves ensuring that debt forgiveness is granted transparently and aligns with strategic, ethical, and legal considerations.

Debt Governance

The oversight and management of a company’s debt obligations. Effective governance involves ensuring that debt governance practices align with financial stability, transparency, and stakeholder interests.

Debt Markets

Financial markets where debt securities are issued and traded. Good governance involves ensuring that participation in debt markets is transparent, ethical, and aligned with the company’s financial strategy.

Debt Overhang

A situation where existing debt discourages new investment due to the risk of default. Good governance involves managing debt levels to avoid overhang and support sustainable growth.

Debt Securities

Financial instruments representing a debt obligation. Effective governance involves managing debt securities responsibly, ensuring compliance with regulations, and protecting investor interests.

Debt-Equity Swaps

The exchange of debt for equity, often used in restructuring. Effective governance involves managing these swaps transparently and ensuring they align with strategic goals and stakeholder interests.

Debtholder Governance

The influence and rights of debt holders in a company’s decision-making. Good governance involves balancing debtholder interests with those of other stakeholders to maintain financial stability and strategic alignment.

Debtor-in-Possession Financing

Funding provided to a company undergoing bankruptcy, allowing it to continue operations. Effective governance involves managing this financing transparently and ensuring it aligns with the company’s restructuring goals.

Decentralized Finance

A financial system without intermediaries, often using blockchain technology. Governance challenges include ensuring transparency, security, and compliance with regulations in decentralized finance.

Deceptive Device

A mechanism or strategy used to mislead stakeholders. Effective governance involves identifying and prohibiting the use of deceptive devices to maintain transparency and ethical standards.

Deep Learning

An advanced form of artificial intelligence that learns from large datasets. In governance, deep learning can be used to improve decision-making and risk management, but it also requires careful oversight to ensure ethical use.

Default Risk

The risk that a borrower will fail to meet obligations. Effective governance involves managing default risk through careful credit assessment, diversification, and risk mitigation strategies.

Default-Liquidity Loop

A feedback cycle where defaults reduce liquidity, leading to more defaults. Good governance involves managing this risk through effective liquidity management and contingency planning.

Defeasance Option

A provision allowing debt to be retired by purchasing risk-free assets to cover obligations. Good governance involves using defeasance options strategically to manage debt and reduce financial risk.

Defensive Measures

Strategies used by companies to fend off hostile takeovers. Effective governance involves ensuring that defensive measures are transparent, justified, and in the best interest of shareholders.

Deficit of Control

A lack of effective oversight or influence over operations. Good governance involves addressing deficits of control by strengthening oversight mechanisms, accountability, and transparency.

DEI

Diversity, Equity, and Inclusion initiatives aimed at promoting a diverse and fair workplace. Effective governance involves integrating DEI into corporate strategies, ensuring representation, fairness, and accountability across the organization.

Delegated Asset Management

The practice of outsourcing investment management to a third party. Good governance involves ensuring that delegated asset management aligns with the company’s goals, is transparent, and includes proper oversight.

Delegated Portfolio Management

Assigning the responsibility of managing investment portfolios to a third party. Good governance involves overseeing delegated portfolio management to ensure alignment with investment objectives and regulatory compliance.

Delegated Trading

The practice of outsourcing trading activities to a third party. Effective governance involves ensuring that delegated trading is transparent, aligns with strategic goals, and includes robust oversight to manage risks.

Demand Futility

A legal concept where a shareholder need not make a demand on the board if doing so would be futile. Effective governance involves understanding the implications of demand futility in derivative lawsuits and ensuring proper board oversight.

Demutualization

The process of converting a mutual organization into a publicly traded company. Good governance involves managing demutualization transparently, ensuring that member interests are protected, and aligning with strategic goals.

Derivative Action

A lawsuit brought by a shareholder on behalf of the company against a third party. Effective governance involves ensuring that derivative actions are used appropriately to protect the company’s interests.

Difference in Differences

A statistical method used to estimate causal relationships. Good governance involves using such methods to evaluate the impact of policies and decisions on the organization.

Digital Transformation

The integration of digital technology into all aspects of a business. Effective governance involves overseeing digital transformation initiatives to ensure they align with strategic goals and enhance operational efficiency.

Direct Action

Legal action taken directly by a shareholder against a company or its officers. Effective governance involves managing direct actions transparently and ensuring that they align with legal and ethical standards.

Direct Investments

Investments made directly into a company or asset, as opposed to through intermediaries. Good governance involves ensuring that direct investments are made strategically, transparently, and aligned with the company’s goals.

Direct Suits

Legal actions brought by shareholders directly for their own benefit rather than on behalf of the company. Effective governance involves ensuring that direct suits are justified, transparent, and compliant with legal standards.

Director Duties

The responsibilities of board members to act in the best interests of the company. Good governance involves ensuring that directors are aware of and fulfill their duties with integrity and accountability.

Director Fiduciary Duties

The legal obligations of directors to act in the best interests of the company and its shareholders. Effective governance involves ensuring that directors understand and fulfill these duties with integrity.

Director Incentives

Compensation and benefits designed to align directors’ interests with those of shareholders. Good governance involves structuring incentives to promote long-term value creation and ethical behavior.

Director Independence

The extent to which board members are free from conflicts of interest. Good governance involves ensuring that a sufficient number of independent directors are present to provide unbiased oversight.

Director Liability

The legal responsibility of board members for their actions or decisions. Good governance involves managing director liability through clear policies, training, and appropriate indemnification measures.

Directors Remuneration

Compensation provided to board members for their services. Good governance involves ensuring that directors’ remuneration is fair, transparent, and aligned with the company’s performance and strategic goals.

Discharge for Value

A legal principle where a debtor is released from liability upon full payment. Effective governance involves ensuring that discharge for value is handled transparently and in compliance with legal standards.

Disclosure Requirements

Legal obligations to provide specific information to stakeholders. Good governance involves ensuring that all disclosure requirements are met accurately, timely, and transparently to maintain trust and regulatory compliance.

Disintermediation

The elimination of intermediaries in financial transactions. Good governance involves managing disintermediation strategically to ensure efficiency, transparency, and alignment with regulatory requirements.

Dispersed Ownership

A corporate structure where ownership is spread across many shareholders. Good governance involves ensuring that dispersed ownership does not hinder effective oversight and aligns with shareholder interests.

Dispersed Shareholders

Shareholders who collectively hold small stakes in a company. Good governance involves ensuring that the interests of dispersed shareholders are represented and protected in corporate decisions.

Disproportional Ownership

Ownership where control rights exceed cash flow rights. Good governance involves managing disproportional ownership transparently to protect minority shareholders and ensure fair decision-making.

Disproportionality of Control and Cash Flow Rights

The imbalance between voting power and economic interest. Effective governance involves addressing this imbalance to ensure fairness, transparency, and alignment with shareholder interests.

Distance Selling

The sale of goods or services remotely, often online. Good governance involves ensuring that distance selling practices are transparent, fair, and comply with consumer protection laws.

Distressed Debt

Debt issued by a company in financial trouble. Good governance involves managing distressed debt responsibly to protect the company’s financial stability and align with strategic goals.

Distributed ledger technology

Blockchain-based technology that enhances transparency and security in transactions. In corporate governance, it can improve record-keeping, shareholder voting, and compliance.

Diversified Shareholders

Investors who hold a broad portfolio of assets to reduce risk. Effective governance involves considering the interests of diversified shareholders in corporate decisions and ensuring transparent communication.

Diversity Washing

The practice of superficially promoting diversity without substantive change. Good governance involves avoiding diversity washing by committing to genuine, transparent efforts to improve diversity and inclusion.

Divestitures

The sale or disposal of assets or business units. Good governance involves managing divestitures transparently, ensuring they align with strategic goals, and protecting shareholder interests.

Divestment

The process of selling off assets or subsidiaries. Corporate governance oversees divestments to ensure they are strategically sound and in the best interests of shareholders and stakeholders.

Divestments

(Repeated) The sale or disposal of assets or business units. Effective governance involves managing divestments transparently, ensuring they align with strategic goals, and protecting shareholder interests.

Dividend Controls

Regulations or policies governing dividend payments. Effective governance involves managing dividend controls to balance shareholder returns with the company’s long-term financial stability.

Dividend Payout

The distribution of earnings to shareholders in the form of dividends. Good governance involves ensuring that dividend payouts are transparent, sustainable, and aligned with shareholder interests and financial strategy.

Dividend policy

The approach a company takes to distributing profits to shareholders. Good governance ensures that dividend policies are sustainable, align with the company’s financial health, and balance reinvestment needs with shareholder returns.

Dividend Reinvestment

The practice of using dividends to purchase additional shares. Good governance involves providing shareholders with transparent options for dividend reinvestment and aligning these programs with strategic goals.

Dodd-Frank Act

U.S. legislation aimed at improving financial regulation and corporate governance following the 2008 financial crisis. It includes provisions to enhance transparency, accountability, and risk management in the financial industry.

Domestic and Cross-Border Takeover Bids

Offers to acquire companies within and across national borders. Effective governance involves managing takeover bids transparently, ensuring compliance with regulations, and protecting shareholder interests.

Dominant Shareholders

Investors with significant control over a company due to large ownership stakes. Good governance involves balancing the influence of dominant shareholders with the rights of minority shareholders to ensure fair decision-making.

Downside Risk

The potential for loss in an investment. Good governance involves managing downside risk through strategic planning, risk assessment, and mitigation measures to protect stakeholder interests.

DRIP (Dividend Reinvestment Plan)

A program allowing shareholders to reinvest dividends in additional shares. Good governance involves ensuring that DRIPs are transparent, fair, and aligned with shareholder interests.

Dual Class Shares

A share structure with different classes of stock offering varying voting rights. Good governance involves ensuring that dual-class shares are managed transparently and protect shareholder interests.

Duty of care

The obligation of directors to act with the care that a reasonably prudent person would take. Corporate governance frameworks enforce this duty to ensure responsible decision-making and protect shareholder interests.

Duty of Loyalty

The obligation of directors and officers to act in the best interests of the company. Good governance involves ensuring that the duty of loyalty is upheld to maintain integrity, trust, and accountability within the organization.

Duty of Loyalty of Corporate Directors

(Repeated) The obligation of directors to prioritize the company’s interests over personal gains. Effective governance involves enforcing this duty to maintain ethical conduct and protect shareholder interests.

Duty of Oversight

The responsibility of directors to monitor and guide the company’s operations. Good governance involves ensuring that directors fulfill their oversight duties to prevent mismanagement and protect the company’s long-term interests.

Duty of Vigilance

The obligation of companies, especially in Europe, to identify and mitigate risks related to human rights and environmental issues. Good governance involves ensuring compliance with duty of vigilance requirements to protect stakeholder interests and avoid legal liabilities.

Dynamic Contracting

The use of flexible contracts that adapt to changing circumstances. Effective governance involves managing dynamic contracting to ensure that agreements remain fair, transparent, and aligned with strategic objectives.

Dynamic Models

Analytical tools that account for changes over time. Effective governance involves using dynamic models to inform decision-making and predict future outcomes based on evolving factors.

Dynamic Treatment Effects

The impact of interventions or policies over time. Good governance involves assessing dynamic treatment effects to understand the long-term implications of decisions and adjust strategies accordingly.

E

E-proxy

Electronic proxy voting allows shareholders to vote on corporate matters online, streamlining the voting process.

Early exercise decisions

Decisions by option holders to exercise their options before expiration, often for tax or strategic reasons.

Earnings game

Manipulative practices by companies to meet or beat earnings expectations through creative accounting.

Earnings manipulation

Tactics by companies to artificially inflate or deflate earnings to meet targets or expectations.

Earnings response

The market's reaction to a company's earnings announcement, affecting stock prices.

Eco-labels

Certifications indicating that a product meets certain environmental standards, influencing corporate sustainability practices.

Effect-based regulation

Regulatory approaches focused on the outcomes of corporate actions rather than the actions themselves.

Efficient breach

A legal theory suggesting that breaching a contract can be justified if it leads to a more efficient outcome.

Efficient capital market hypothesis

The theory that asset prices reflect all available information, impacting investment strategies and corporate governance.

Elective stock dividend

A dividend that shareholders can choose to receive as additional shares rather than cash, impacting corporate capital structure.

EMIR

European Market Infrastructure Regulation, which governs derivatives trading and risk management in the EU, affecting corporate governance in financial institutions.

Empirical class actions

Legal actions based on observed data and trends, relevant in corporate governance for addressing widespread shareholder grievances.

Employee stock options

Incentive programs giving employees the right to buy company shares at a future date, aligning their interests with shareholders.

Empty voting

A situation where a party votes shares without a corresponding economic interest, raising governance concerns about shareholder influence.

Endogeneity

The issue in research where cause and effect are intertwined, relevant in governance studies for identifying true drivers of outcomes.

Endogenous governance

Governance structures that evolve from within the company based on internal dynamics, as opposed to external imposition.

Enhanced pecking order

A theory suggesting that companies prioritize financing methods in a specific order, impacting their capital structure and governance.

Enlightened shareholder value

A governance approach that balances shareholder interests with those of other stakeholders, promoting long-term value creation and sustainability.

Entire fairness

A legal standard that requires corporate transactions to be fair in both process and price, crucial in governance disputes.

Entity shielding

Legal protections that separate a company’s assets from its owners, reducing personal liability and influencing corporate governance structures.

Entity theory

The concept that a corporation is a separate legal entity from its shareholders, affecting governance by distinguishing corporate rights and responsibilities.

Entity transparency

The degree to which a company’s operations, decisions, and financials are open and accessible, crucial for good governance.

Entrenchment

The situation where managers or board members secure their positions, potentially at the expense of shareholder interests, impacting governance effectiveness.

Entrenchment effect

The negative impact on corporate governance when managers or directors resist changes that could benefit shareholders.

Entrenchment index

A measure used to assess the extent to which management or directors are entrenched in their positions, influencing governance assessments.

Environmental social and governance (ESG)

A framework for assessing a company’s operations based on environmental, social, and governance criteria, central to modern governance.

EPA enforcement

Actions by the Environmental Protection Agency to ensure compliance with environmental laws, impacting corporate governance through penalties and regulations.

Equal treatment of shareholders

Ensuring that all shareholders have the same rights and opportunities, central to fair corporate governance.

Equitable subordination

A legal doctrine that allows courts to prioritize the claims of certain creditors over others in bankruptcy, impacting governance in financial distress.

Equity crowdfunding

Raising capital from a large number of small investors in exchange for equity, affecting governance through increased shareholder diversity.

Equity decoupling

The separation of voting rights from economic ownership, raising governance concerns about shareholder influence and control.

Equity swap

A financial derivative in which two parties exchange future cash flows based on equity performance, relevant in governance for risk management.

Equity tunneling

The extraction of value from a company by controlling shareholders at the expense of minority shareholders, a significant governance concern.

Equity vesting

The process by which employees gain full ownership of equity-based compensation, important in governance for aligning incentives with company performance.

ESG

Environmental, Social, and Governance criteria used to evaluate a company’s operations, increasingly important in corporate governance for ethical and sustainable practices.

ESG ratings

Assessments of a company’s performance on environmental, social, and governance criteria. Good governance uses ESG ratings to benchmark practices, improve sustainability, and attract responsible investors.

ESMA

European Securities and Markets Authority, a regulatory body overseeing financial markets in the EU, impacting corporate governance through compliance and regulation.

ESOPs

Employee Stock Ownership Plans that give workers ownership in the company, aligning their interests with corporate governance goals.

Eurobonds

Bonds issued in a currency not native to the country where it is issued, relevant to governance for multinational financial strategies and risk management.

Eurodollars

U.S. dollars held in banks outside the United States, influencing corporate governance through global financial strategies and liquidity management.

European market infrastructure regulation (EMIR)

A regulation aimed at improving the transparency and stability of the EU derivatives market, impacting corporate governance through compliance and risk management.

European takeover directive

A regulation that provides a framework for mergers and acquisitions across the EU, impacting corporate governance by ensuring transparency and protecting shareholders.

Event study

A methodology in finance and economics that examines the impact of specific events on stock prices, relevant to governance for understanding market reactions.

Evolutionary theory of corporate law

A theoretical approach that examines how corporate laws adapt over time in response to economic, social, and technological changes.

Ex day

The day on which a stock begins trading without the value of its next dividend, relevant in governance for determining shareholder rights and dividend distribution.

Exchange competition

The rivalry between different financial exchanges to attract listings and trading volume, influencing governance through regulatory standards and market practices.

Exchange-traded funds (ETFs)

Investment funds that trade on stock exchanges, affecting governance by influencing market liquidity and shareholder activism.

Exclusive forum clauses

Legal provisions in corporate charters that require certain disputes to be litigated in specific courts, impacting governance by centralizing legal oversight.

Exculpation and exoneration clauses

Provisions that protect directors and officers from personal liability under certain conditions, influencing governance by limiting legal risks.

Executive pay

Compensation awarded to top executives, a central governance issue involving performance incentives, fairness, and alignment with shareholder interests.

Exit consents

Agreements by bondholders to amend bond terms during a restructuring, impacting governance by influencing the outcomes of financial negotiations.

Exit governance

Strategies and policies related to how investors, particularly shareholders, can exit their investments, affecting company control and governance.

Exit v. Voice

A concept in corporate governance where shareholders can either "exit" by selling their shares or use their "voice" to influence company decisions.

Exogenous shocks

Sudden, external events that disrupt markets or companies, requiring adaptive governance to manage risks and mitigate impacts.

Expense ratio

A measure of the costs associated with managing an investment fund, important in governance for evaluating fund performance and cost efficiency.

Explorative innovation

Innovations aimed at discovering new markets or technologies, challenging governance with the need to manage uncertainty and risk.

Externalities

The unintended consequences of a company's activities on third parties. Corporate governance addresses externalities by promoting responsible practices and mitigating negative impacts on society and the environment.

Externality

The unintended side effects of business activities on third parties, a governance concern in managing social and environmental impacts.