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 indude the company's executives and managers, shareholders, creditors, current and former employees, competitors, and local and global communities. In simple terms, corporate governance provisions can take two forms: and provide undertaking activities that are beneficial to the firm's stakeholders, and the latter intended to 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 be removed, all other things remaining equal. with the former intended to reinforcement for management for its undesirable likely to decisions or actions. Internal and external corporate governance provisions and activities can take many forms, induding the use of interlocking board members. Which of the following best describes this practice? O in this situation, a firm's CEO also serves as the chairperson of the board and personally selects all of the members of the firm's board O tn this situation, a board member of one firm also serves as a member of another firm's board or on its management team. This practice requires that all members of a firm's board of directors e elected in each election. if you were making recommendations to repair a dysfunctional board of directors, which of the following practices would you suggest be implemented? Yes, recommend No, do not recommend implementationimplementation Suggested Practice The board should recommend that the company keep financial records and report financial statements that are in compliance with generally accepted accounting standards. The company's charter should make hostile takeovers easier to accomplish. The board of directors should not monitor the decisions and behaviors of senior mapagement. Senior management's cash bonuses should be tied solely to the

Explanation / Answer

1 )Two forms of Corporate Governance Provisions are : carrots and Sticks with the former intended to provide Monetory reinforcementsfor undertaking activities that are beneficical to the to the firms stakeholders and later intended to control management for its undesirable deciusions or actions.

2) An entrenched mangement is the one that is most likely to be removed.

3) Interlocking Board Members : In this situation a board member of one firm also serves as a member of another firm’s board or on its management team

4)

Keep and report financial statements in compliance with generally accepted accounting principles : Yes, recommend Implementation

5) The companies charter makes hostile take overs easier to accomplish: Yes, recommend Implementation

6)The board of directors should not monitor the decisions and behaviors of senior management: No, do not recommend Implementation

7) Senior management’s cash bonuses should be tied solely to the short term share price performance: Yes, recommend Implementation

Related Questions

Navigate

• Browse (All)
• Browse 4
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.