Corporate governance is the set of rules — formal and informal — that determine who controls a company and who it's actually run for. In a small business, the owner makes the calls and lives with the consequences. In a large public company, those two things come apart. The people making decisions aren't the same people whose money is on the line. That gap is where almost everything interesting in corporate governance happens.

Economists have a name for this gap: the principal-agent problem. The principals are the shareholders — they own the company. The agents are the executives hired to run it. The problem is that agents have their own interests, and those interests don't always line up with the principals'. A CEO might want a bigger empire, a safer strategy, a quieter quarter. Shareholders want returns. Those aren't the same thing, and the CEO is the one with their hand on the wheel.

A typical public company has millions of shareholders. Most own a fraction of a percent. None of them have the time, information, or leverage to monitor what management is doing day to day. So they delegate oversight to a board of directors — a group elected to represent their interests. In theory, the board hires and fires the CEO, sets pay, and keeps strategy honest. In practice, boards are often chosen by the very CEO they're supposed to supervise. They meet a few times a year. They rely on management for information. The principal-agent problem doesn't disappear; it just moves up one level. This is the world most large public companies live in. The CEO's job security depends more on keeping the board comfortable than on keeping shareholders rich. That's not corruption — it's just the structural reality of running a company where ownership is spread across millions of strangers who've never met.