Final answer:
Corporate governance is derived from the separation of ownership and management seen in public companies, where shareholders elect a board to oversee executives.
Step-by-step explanation:
The concept being referred to is corporate governance, which arises from the distinction between ownership and management within modern corporations. In a private company, the owners usually manage the day-to-day operations, such as in a sole proprietorship or a partnership.
However, when a company goes public and sells stock, it becomes owned by shareholders who elect a board of directors to oversee management. Corporate governance refers to the frameworks that are intended to monitor and guide these top executives to ensure they manage the company in the best interests of the shareholders, although it is acknowledged that it may not always be effective.
This is known as corporate governance, which refers to the institutions that are supposed to watch over top executives and ensure that they make decisions that are in the best interest of the company and its shareholders. Corporate governance helps to maintain transparency, accountability, and fairness within the organization.