In the context of law, what is the main focus of corporate governance?

Corporate governance primarily deals with the systems and processes that direct and control corporations. The main focus is on defining the relationships between the various stakeholders in a corporation, particularly the relationships between the owners (shareholders) and the agents (executives and board members) who manage the corporation on their behalf. This governance framework is essential for ensuring that executives act in the best interests of shareholders, thus addressing issues such as accountability, risk management, and performance evaluation.

By clearly delineating these owner-agent relationships, corporate governance aims to mitigate conflicts of interest that can arise when executives make decisions that may not align with the interests of the investors. Effective corporate governance practices enhance transparency, ethical decision-making, and ultimately contribute to organizational sustainability and shareholder value.