Professional Documents
Culture Documents
Chapter 3
1. Corporate Governance:
a. Corporate governance is the formal system of oversight,
accountability, and control for organizational decisions
and resources = the system of rules, practices and
processes by which a company is directed and
controlled
b. It essentially involves balancing the interests of the
many stakeholders in a company these include its
shareholders, management, customers, suppliers,
financiers, government and the community
c. Oversight: a system of checks and balances that limit
the employees
d. Accountability: ensure that
e. Control:
2. Corporate governance major issues:
a. Shareholder rights
b. Executive compensation
c. Organizational ethics programs
d. Board composition and structure
e. Auditing, control and risk management
f. CEO selection and executive successions plans
3. Corporate governance framework
a. Most businesses operate under the belief that the
purpose of business is to maximize profits for
shareholders
b. The stakeholder model places the board of directors in a
position to balance the interests and conflicts of various
constituencies
c. Directors and officers of corporations are placed in
positions of trust and must exercise a duty of diligence
and a duty of loyalty in decision making
d. Board of director job is to ensure that the organization
do not go off track of the organizational objectives.
4. History of corporate governance
a. Before early 1990s, same people owned and controlled
corporations little CG (e.g.: barber, pizza palour owner)
b. 1942 U.S. Securities and Exchange Commission (SEC)
is formed, requiring corporations to allow shareholder
resolutions to be brought to a vote of all shareholders
c. Mid 1990s the goal of business is to align the interests
of principals (owners - state, shareholders, nonprofit
groups, families, indv, etc) and agents so that
organizational value and viability are maximized model
of corporate
13.
14.
15.