What is Disciplinary Governance?

Governance mechanisms potentially serve various functions and, through these functions, influence the organization’s performance and the satisfaction of its different stakeholders.
The function that has historically attracted the most attention in governance analyses is the so-called disciplinary function. According to this disciplinary approach, the main role of governance is to impose discipline on management in order to safeguard the legitimate interests of the organization’s stakeholders—particularly the shareholders, in the case of a company.
This is referred to as the shareholder-oriented disciplinary approach to governance.