Market-based corporate governance system

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Market-based corporate governance system

Organization of a corporation whereby the supervisory board represents a dispersed set of largely equity shareholders.

Market-Based Corporate Governance System

A form of corporate governance where representatives of shareholders, managers, employees, and others all sit on the board of directors. As with most forms of modern corporate governance, there is a heavy bias toward shareholders in a market-based corporate governance system because they provide most or all of the company's capital for operations. This system is both praised as efficient and derided for not taking broader interests into account.