Business Sustainability, Corporate Governance, and Organizational Ethics

CHAPTER 15Managerial Function

1. Introduction

The managerial function of corporate governance is delegated to management to manage the organization for the benefit of its owners and other stakeholders. The board of directors of public companies as representative of shareholders appoints the management team heading by the chief executive officer (CEO) and other members including the chief financial officer (CFO), controller, treasurer, and other officers to manage the company. The board of directors oversees managerial function to minimize the potential conflicts of interest and information asymmetry between shareholders and management and to align management interests with those of shareholders. Managerial functions consist of achieving operational efficiency, enhancing the quality, reliability, and transparency of financial reports, ensuring compliance with applicable laws, regulations, rules, and standards and assessing and managing risks. This chapter presents roles, responsibilities, and accountability of management in achieving operational, financial and investment performance in creating shareholder value while protecting interests of other stakeholders.

Learning Objectives

• Introduce the managerial function of corporate governance.
• Understand the roles, responsibilities, and duties of corporate senior executives including the chief executive officer (CEO) and chief financial officer (CFO).
• Identify the components of executive compensation and illustrate how each of ...