4. Corporate governance: Methods for influencing management\'s decisions Aa Aa C

Question

4. Corporate governance: Methods for influencing management's decisions Aa Aa Corporate governance refers to policies and rules, regulations and laws, and activities that (1) influence both management's decisions and its company's operations, and (2) affect the relationships between a business's stakeholders. These stakeholders include the company's executives and managers, shareholders, creditors, current and former employees, competitors, and local and global communities. These governing forces are both internal and external to the organization, and can either align management's interests with those of their shareholders (a positive outcome) or further entrench the firm's management (a not-so-positive outcome). An entrenched management is one that is ess ikely to be removed, all other things remaining equa In simple terms, corporate governance provisions can take two forms carrots and sticks, with the former intended to provide undertaking activities that are beneficial to the firm's stakeholders, and the latter intended to reinforcement for management for its undesirable decisions or actions.

Explanation / Answer

Fill in the blanks :

1. Strong

2. Make management responsible

For first question, option b should apply as there's no point in keeping voting rights of a shareholder who has sold his/her shares to an acquiring firm.

For second question, option b should be checked as corporate governance indeed dictates majority of independent directors who will perform their duties without any bias.

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