Premium Essay

Corporate Governance – Questions

In: Business and Management

Submitted By samioa
Words 521
Pages 3
1. When does a corporation need a board of directors?
A board of directors (BOD) is very critical for a corporation that would need to:
• Establish a corporate governance structure that will regulate the relationship between its BOD, top management and shareholders which would lead to a better control over its strategic direction and short-term and long-term performance.
• Have a higher management team that shall act as an advisory and governing team over CEO and his management team which will help to protect the shareholders’ interests, prevent conflict of interests and manage risks as well as protecting the corporation’s image and integrity in front of other stakeholders such as creditors, investors and the country’s government.

2. Who should and should not serve on a board of directors?

Obviously, there is no one definite answer to this generic question as it depends on the nature and size of company’s business, whether it is public-sector or private-sector corporation, country’s laws and regulations and other factors. Generally, there has to be a balance between inside and outside directors that could come from external stakeholders, and also affiliated directors as well as experienced and retired executives. At the same time, there should not be large number of directors that could affect negatively BOD meetings progress and outcomes.

3. Should a CEO be allowed to serve on another company’s board of directors?
This is the concept of interlocking directors who could serve on other company’s BOD’s in addition to being a CEO for their original companies. The concept has some advantages of gaining useful information and expertise that could help in managing better the corporation strategies and operational plans as well as establishing strong relations with other corporation’s executives. However, serving on other BOD’s should not make the CEO spend…...

Similar Documents

Premium Essay

Corporate Governance Questions

...they have the smaller the agency problem. -they will effectively start becoming the owners of the company and will act more like an owner. b)Avoid giving managers too much voting power now. -Equity ownership gives executives massive voting power that is so large that no other shareholder will be able to influence decisions and the managers will be able to control everything including their own reappointment onto the BOD. - A vesting period usually exists where stock options can only be exercised after a period has elapsed. c)Cash flow might not be adversely affected. -In contrast to performance based compensation payable in cash, stock options do not adversely affect cash flow and, generally, do not detract significantly from corporate earnings as computed for accounting purposes. Costs a)Pricing executive options; financial charges associated should be recognized as part of profit or loss. - May need to deposit cash or borrow on margin using other securities in Fidelity Account as collateral to pay financial charges of option cost, brokerage commissions and any fees and taxes which are recognized in the profit and loss statement. -Tax implications can be very complicated and may cause to consult a tax advisor which is also an expense to the company. b) Dilution effect when exercised (creates more shares which dilute ownership stake of all stakeholders. -Lowering the value of the shares since more shares are being issued. c)Exercise price can be......

Words: 3053 - Pages: 13

Premium Essay

Acc 511 Corpporate Governance & Accountability

...Corpporate Governance & Accountability Get Tutorial by Clicking on the link below or Copy Paste Link in Your Browser https://hwguiders.com/downloads/acc-511-corpporate-governance-accountability-amaterial/ For More Courses and Exams use this form ( http://hwguiders.com/contact-us/ ) Feel Free to Search your Class through Our Product Categories or From Our Search Bar (http://hwguiders.com/ ) Table of content 1. Question 1 1. Introduce to Corporate Governance 2. Governance makes a Difference 3. Failures of Corporate Governance 4. Failures in Major companies 5. Reform of Corporate Governance 6. Conclusions 2. Question 2 1. Introduce to Cadbury Report 2. Conclusions 3.0 References Question 1 Based on the above it has been stated that “the problem is not a failure to comply with rules but a failure in governance practice”. Do you agree and why? (10 Marks) Introduce to Corporate Governance Corporate governance looks at issues pertaining to transparency, integrity, effectiveness and accountability in the management of the affairs, and all other activities of an organization. Management is concerned with the company’s operations, functions and financial performance; hence, corporate governance aims to involve the quality assurance of the operation of the board itself. The concern is for the welfare, good performance, corporate ethics and morality, as well as social and public responsibility for the good corporate citizenship. Corporate governance also......

Words: 8715 - Pages: 35

Premium Essay

Asmdna Akdjak

...Jashldkahsdkhalksdlakjsldkjasjdlkajlskdjlkajksjdlkajsd Asdj;ajsdkjakjsdkjaksjdkajskdjajsldkja jkajsldkjalkjsldkjlakjsdlkjalkjsdkakjsdkajlksjdlkajlskdx Collins, Ellen I have attained two undergraduate degrees in European studies and law and a Masters degree in trade, corporate governance and European law; in highly recognisable UK universities. Currently I am undertaking a full time Masters degree in Business law in one of the best UK and world universities. I am an experienced researcher and I have worked on different research projects demanding law elements from UK and other jurisdictions. In addition I have more than a year's legal work experience providing the law firm's clients with high quality legal research documents. I have an eye for perfection. It will be a pleasure to work for you. Sample Do the UK Combined Code on Corporate Governance and the legislative framework regulating Listed PLC's in the UK effectively address the problems revealed by the corporate scandals of recent times? Introduction> In UK there are the sole trader, the partnerships, the companies and the joint venture, structure businesses. For the sole trader and the partnerships because the businesses are controlled by the owners and they work for the benefit of the owners, it has not been necessary to have increased measures for the protection of the owners benefit. In the companies though that it is a different legal entity, not related to the persons that initially established it, there......

Words: 28138 - Pages: 113

Premium Essay

Acc 511 Corpporate Governance & Accountability

...Table of content 1. Question 1 1. Introduce to Corporate Governance 2. Governance makes a Difference 3. Failures of Corporate Governance 4. Failures in Major companies 5. Reform of Corporate Governance 6. Conclusions 2. Question 2 1. Introduce to Cadbury Report 2. Conclusions 3.0 References Question 1 Based on the above it has been stated that “the problem is not a failure to comply with rules but a failure in governance practice”. Do you agree and why? (10 Marks) Introduce to Corporate Governance Corporate governance looks at issues pertaining to transparency, integrity, effectiveness and accountability in the management of the affairs, and all other activities of an organization. Management is concerned with the company’s operations, functions and financial performance; hence, corporate governance aims to involve the quality assurance of the operation of the board itself. The concern is for the welfare, good performance, corporate ethics and morality, as well as social and public responsibility for the good corporate citizenship. Corporate governance also involves in system to ensure that the organization’s obligations to its major stakeholders. The relationship among the many stakeholders and the way of corporation is directed and governed is therefore created. Stakeholders might include customers, employees, creditors, suppliers and distributors, the...

Words: 1852 - Pages: 8

Premium Essay

Research Proposal

...of mobile telecommunications corporate governance firms in Zimbabwe. By Mugombe Godfrey Background and Introduction The purpose of this study is to provide insight into the association between business performance of the telecommunications sector in Zimbabwe and corporate governance practices as prescribed in the Organization for Economic Cooperation and Development (OECD). It is widely believed that better corporate governance manifest itself in enhanced corporate performance and lead to higher economic growth (Brickley & James, 2011). There are four major players in the mobile telecommunications sector of Zimbabwe namely Econet Wireless Zimbabwe, Telecel Zimbabwe, NetOne and Africom. NetOne is a state controlled entity whilst the other three companies are privately owned with Econet Wireless Zimbabwe commanding the lion’s share of mobile telephone & broadband business in Zimbabwe (Econet Wireless Zimbabwe, 2013). Statement of the problem The major telecommunications companies in Zimbabwe like NetOne, Telecel, Africom and Econet have embraced corporate governance principles and practices since the turn of the new millennium. However, as Ernst & Young (2012) and Gwatiringa (2012) show, wide ranging differences on corporate performance exist in these companies even after the introduction of the multiple currency regime in 2009. It therefore remains unknown to the public stakeholders and the practitioners of corporate governance in general and potential......

Words: 1395 - Pages: 6

Premium Essay

Ethics

...The Importance Of Corporate Ethics and Values: Building a Sustainable Strategy Model for Effective Implementation of Good Corporate Governance within a State-Owned Enterprise in South Africa. A Research Study Presented to the Graduate school of Business Leadership University of South Africa In Fulfillment of the Requirements for the MASTERS DEGREE IN BUSINESS LEADERSHIP UNIVERSITY OF SOUTH AFRICA Prepared by Lazarus Docter Mokoena (called Bonga) [Student No: 0555-418-7] Tel: 011-217 1187 (Work); 011-679 5486 (Home) Cell: 082 466 6896 SUPERVISOR: PROFESSOR M.H. CROSBIE FINAL RESEARCH REPORT November 2005 TABLE OF CONTENTS EXECUTIVE SUMMARY ............................................................................. 4 CHAPTER 1 ............................................................................................... 8 1. 1.1 1.2 1.3 1.4 1.5 1.6 INTRODUCTION................................................................................. 8 ESKOM’s COMPANY BACKGROUND ................................................ 8 ESKOM’s BUSINESS CONDUCT POLICY .......................................10 PURPOSE OF THE RESEARCH .......................................................12 PROBLEM STATEMENT .................................................................14 IMPORTANCE AND BENEFITS OF STUDY .....................................17 RESEARCH PROPOSITIONS AND HYPOTHESIS ...........................18 1.6.1 Propositions ...................................

Words: 27408 - Pages: 110

Premium Essay

Human Governance

.... | What is human governance essentially about? |   |   |   | Meeting the education and development needs of members as part of a commitment to help members be knowledgeable and maintain their relevance in today's markets |   |   | 2. | How is human governance different from corporate governance? |   |   |   | Corporate governance is manifested as an external, outside-in rules and regulations to legislate the corporations whereas human governance is an inside-out values-based conviction to guide the human where human is viewed essentially as a non-material soul and embodied in the physical being rather than as machine. Being parameter-driven and rule-based, corporate governance emphasises the letter of the law unlike human governance which is about the spirit of the law. |   |   | 3. | How will human governance benefit us? |   |   |   | As the leading segment of society, business has become the most powerful force for positive change in the world today taking over the role of governments. Decision-making process of business now must take into consideration human well being and the interest of the people.  For business corporations to assume this role is never easy since conflict can arise between serving the self and the public. History shows that the original corporations were actually regulatory agencies such as guilds or local governments and had nothing to do with profits. But, over time, events such as the formation of “joint stock companies” and......

Words: 915 - Pages: 4

Premium Essay

Case

...CORPORATE GOVERNANCE IN NEPALESE FINANCIAL SECTOR: DOES POLICY MATTER? Submitted To Research Committee Research and Consulting Service Department Nepal Administrative Staff College Submitted By Basanta Raj Sigdel Santosh Koirala June, 2015 Copyright: Nepal Administrative Staff College Recommended Citation Sigdel, B.R. & Koirala, S. (2015). Corporate governance in Nepalese financial sector: Does policy matter? Lalitpur, Nepal: Nepal Administrative Staff College. Declaimer: This study is funded by Nepal Administrative Staff College. The opinion expressed in this research report do not represent official position of Nepal Administrative Staff College and are those of the researchers. ACKNOWLEDGEMENT This research paper has been materialized in this form with the help of many individuals and institutions. First, the team extends profound gratitude to the respected respondents of banks and finance companies for their valuable and generous support without which the project would not have been successful. Similarly, we are thankful to the Research Committee of NASC and Research and Consulting Services Department for their continuous guidance, facilitation and support in this endeavor. ABSTRACT The study examines insiders' perspectives on the determinants of corporate governance in the Nepalese financial sector. For this, we use a 5-point Likert scale questionnaire developed by CLSA, modified and contextualized to Nepalese setting. The......

Words: 7165 - Pages: 29

Premium Essay

Corporate Governance

...Question No. | Answer | 1 | a. Well-developed equity market & dispersed ownership | 2 | c. Voluntary practices | 3 | a. Advertising | 4 | a. Monetary Policy | 5 | c. That portion of bank’s total cash reserves which they are statutorily required to hold with the RBI. | 6 | b. The Greenbury Committee, 1995 | 7 | b. Bank | 8 | d. Harshad Mehta scam, 1992 | 9 | b. Diffused Debt | 10 | a. Director | 11 | b. De Facto | 12 | b. Independent auditors | 13 | a. Ganguly Group | 14 | c. Bribery | 15 | c. The Pluralistic Model | 16 | a. The National Environment Policy, 2004 | 17 | b. Dhanuka Committee | 18 | a. It lays down the framework for creating long-term trust between companies & the external provides of capital | 19 | d. He has to ensure that his work involves exercise of judgment. | 20 | b. Stewardship Theory | Section B: Short Notes | Question | Answer | 11(continued)1(continued) | Clause 49The term ‘Clause 49’ refers to clause number 49 of the Listing Agreement between a company and the Stock Exchanges on which it is listed. The Listing Agreement is identical for all Indian Stock Exchanges, including the NSE and BSE. This clause is a recent addition to the Listing Agreement and was inserted as late as 2000 consequent to the recommendations of the Kumar Mangalam Birla Committee on CG constituted by SEBI in 1999. Clause 49, when it was first added, was intended to introduce some basic CG practices in Indian companies and......

Words: 4860 - Pages: 20

Premium Essay

Corporate Governance and the Role and Internal Audit Within Higher Education in United Arab Emirates (Uae)

...Title CORPORATE GOVERNANCE AND THE ROLE AND INTERNAL AUDIT WITHIN HIGHER EDUCATION IN UNITED ARAB EMIRATES (UAE) Why I am interested in this area I am working as Senior Internal Auditor in the Education Industry from last 4 years and for this reason, I consider it as a great opportunity to explore and research, that, any importance is available and provided in this aspect or not and what are the preventive and mitigating measures taken by the Institutions to overcome towards any shortfalls or problems. The term “Corporate Governance” is relatively new in this area and specially in the field of Education and it will not only be a great learning curve for me but will also help me understand the Industry practices, and for sure it will help towards my future development and getting more experience in this field. Introduction to the focus of study Similar to the counterpart of the industries, Educational institutes are facing increasing demand for accountability. Students for example requires a strong institutional commitment towards their future growth and quality teaching, agencies and donors requires assurance that institutions are contributing towards public good moreover they are also concern about the correct utilization of their funds/ donations i.e. are they being utilized according to their desires and requirements. For government and related agencies, they are concern with the implementation of regulations and other procedures. Alumni want an......

Words: 2460 - Pages: 10

Premium Essay

Corporation Cg Performance Analysis Report

...report is to evaluate the corporate governance performance of the Constellation Brands, Inc., based on its last fiscal year’s US SEC filings, and then to use the relevant findings and information to discuss the implications for the company, investors, regulators, and the economy. 1.2 Scope While evaluating the corporate governance performance of the company, it is useful and important to pay attention to the four core values of corporate governance, including transparency, accountability, responsibility, and fair and equitable stakeholders, as well as to consider some indicators of the company, such as its Board Structure, Compensation system, Shareholder Rights, and Audit issues. On the other side, the financial information that the company disclosed on its financial statements is also considerable to deal with its corporate governance performance analysis. 1.3 Method I divided the whole report into three main parts—Self-Diagnostic Issues, Competitor-Diagnostic Issues, and SWOT Analysis—to analyze the corporate governance performance of the company comprehensively. In the first section, I did a 100-question corporate governance survey using “Corporate Governance Self-Diagnostic Toolkit” to rank the company from scoring scales. In the second section, I compared some important indicators of the company, such as revenues, capitalization, stock price, ROE, and numbers of BOD, to its main competitors to discuss whether the company’s corporate governance performance is......

Words: 2138 - Pages: 9

Premium Essay

Sound Financial Reporting Is Good for Bringing Confidence Back to the Corporate World.

...[pic] SOUND FINANCIAL REPORTING IS A GOOD THING FOR BRINGING CONFIDENCE BACK TO THE CORPORATE WORLD Submitted By: Ahmed Shafiul Huq 801414063 Principle of Accounting (EIB505) Section: B Executive Master of Business Administration Submitted To: Mr. Mohammad Rakib Uddin Bhuiyan Assistant Professor Department of International Business Faculty of Business Studies EXECUTIVE SUMMARY A company’s financial reporting amalgamates important documents to create an effective spreadsheet to simplify the financial data of an organization. It captures much of the information that organizations prepare, publish, and use. Financial reporting plays an integral role in the capital markets and economic stability and growth, and efforts to enhance its quality are vital. A Sound Financial Reporting provides us relevant, meaningful, reliable, accurate and comprehensive reporting of management stewardship whether in the form of numbers or other operating data. It is increasingly important for businesses to be financially transparent and for governments to establish a sound regulatory environment for corporate financial reporting. Sound financial reporting can benefit business by some ways just like valuing business, easy to......

Words: 3507 - Pages: 15

Premium Essay

Relevance of Corporate Governance

...COURSE: CORPORATE GOVERNANCE QUESTION: RELEVANCE OF CORPORATE GOVERNANCE TO A MODERN COMPANY SUBMITTED TO: DR. ONGORO LIST OF ACRONYMS: OECD: Organization for Economic Co-operation and Development QUESTION: DISCUSS THE RELEVANCE OF CORPORATE GOVERNANCE TO THE MODERN COMPANY INTRODUCTION Corporate governance has reached centre-stage in the global agenda. The principles and codes evolved in several countries have furthered the cause of efficiency, transparency and equity particularly in the interest of the shareholders. Sustainable shareholder value has become the mantra for corporate immortality translating eventually into welfare of the society. Corporate governance is based on the relationship between agents and principals (agency theory). Agency theory explains how best the relationship between agents and principals can be tapped for purposes of governing a corporation to realize its goals. The owners of capital (shareholders) are the principals while the agents are the managers. The principals select and put in place both governors (directors) and auditors and ensure effective governance system is implemented whereas the managers are responsible for the day to day operations. Therefore corporate governance involves the way in which the boards oversee the running of a company by its managers and how board members are in turn accountable to shareholders and the company. DEFINITIONS OF CORPORATE......

Words: 1845 - Pages: 8

Premium Essay

Internal Control

...Annals of the University of Petroşani, Economics, 11(1), 2011, 187-196 187 INTERNAL CONTROLS IN ENSURING GOOD CORPORATE GOVERNANCE IN FINANCIAL INSTITUTIONS KOSMAS NJANIKE, MARGARET MUTENGEZANWA, FUNGAI B. GOMBARUME * ABSTRACT: This paper assessed factors that influence the internal controls in ensuring good corporate governance in financial institutions in developing economies with special reference to Zimbabwe. The research paper assessed how lack of internal controls affected good corporate governance and aimed to bring out elements of good corporate governance. It emerged that failure to effectively implement internal controls contributed significantly to poor corporate governance. The study discovered that internal control system overrides and the issue of “fact cat” directors also contributed to poor corporate governance. The study recommended that there is need for the board of directors to guarantee an organizational structure that clearly defines management responsibilities, authority and reporting relationships. There is also need to ensure that delegated responsibilities are effectively carried out to ensure compliance with internal controls of the financial institution concerned. KEY WORDS: internal controls; corporate governance; ethical behaviour. JEL CLASSIFICATION: G21, G28; G30; G38. 1. INTRODUCTION The year period December 31 2003 to December 31 2004 witnessed the collapse of a number of financial institutions in Zimbabwe. This period witnessed......

Words: 4547 - Pages: 19

Premium Essay

Corporate Governance in Businesses Today

...Models of Corporate Governance 1. Anglo-US Model The Anglo-US model is based on a system of individual or institutional shareholders that are outsiders of the corporation. The other key players that make up the three sides of the corporate governance triangle in the Anglo-US model are management and the board of directors. This model is designed to separate the control and ownership of any corporation. Therefore the board of most companies contains both insiders (executive directors) and outsiders (non-executive or independent directors). Traditionally, though, one person holds the position of CEO and chairman of the board of directors. This concentration of power has led many companies to include more outside directors now. The Anglo-US system relies on effective communication between shareholders, management and the board with important decisions being put to the vote of the shareholders (O'Connell, 2006). 2. Japanese Model The Japanese model involves a high level of ownership by banks and other affiliated companies and "keiretsu," industrial groups linked by trading relationships and cross-shareholding. The key players in the Japanese system are the bank, the keiretsu (both major inside shareholders), management and the government. Outside shareholders have little or no voice and there are few truly independent or outside directors. The board of directors is usually made up entirely of insiders, often the heads of the different divisions of the company. However,......

Words: 1173 - Pages: 5