The definition of corporate governance

Literally, the word corporation is derived from the latin word corpus which
means body. According to the Oxford English Dictionary, it can be used to
define a large company or group of companies authorized to act as a single
entity and recognized as such in law. The word governance is derived from
the latin word gubernare which means to steer or to govern. The Oxford
English Dictionary defines to govern as to guide, direct or steer society Although
the term Corporate Governance was used mostly from the 1980s, it has been
practiced for as long as there have been corporate entities. As businesses evolved
from sole proprietorship and partnerships into public companies, the separation of
power between the managers and the shareholders became apparent. Safeguarding
the interests of the shareholders and stakeholders is the crux of corporate
governance. The Oxford Dictionary of Finance and Banking, defines corporate
governance as the manner in which organizations, particularly limited companies,
are managed and the nature of accountability of the managers to the owners

Islamic Perspective on Corporate Governance

The concept of corporate governance does not differ much from the Islamic
perspective as the main objective is to protect all stakeholders interest. There has
been astudy done by Choudary M.A and Hoque M.Z (2004), who have developed an
Islamic Corporate governance model based on Tawhid or believe in the Oneness of
Allah. Iqbal Z. and Mirakhor A.( ) proposed the Stakeholder model in which it
protects the interest of all stakeholders rather than shareholder per share