Corporate Governance and Ethics

Chapter 11

Roles and Responsibilities of Other Corporate Governance Participants

INTRODUCTION

LEGAL COUNSEL

FINANCIAL ADVISORS

INVESTMENT BANKS

SUMMARY

KEY TERMS

REVIEW QUESTIONS

DISCUSSION QUESTIONS

NOTES

INTRODUCTION

Roles and responsibilities of corporate officers, directors, and gatekeepers, including independent auditors, are discussed in previous chapters. This chapter presents the advisory function of corporate governance that is typically assumed by professional advisors, including legal counsel, financial analysts, and investment bankers. These corporate governance participants assist companies in evaluating legal and financial consequences of business transactions. Professional advisors participate in corporate governance by providing advisory services to the company's board of directors and management. Management has traditionally engaged professional advisors for the structure, measurement, recognition, and disclosure of business transactions. SOX requires that the audit committee be provided with funding to hire advisors as deemed necessary. This funding should be provided to the entire board of directors.

Primary Objectives

The primary objectives of this chapter are to

• Understand the advisory function of corporate governance normally provided by legal counsel, financial advisors, and investment banks.
• Recognize the traditional role of legal counsel and how it has changed, as well as the lines of communication between legal counsel, the company, and its board of ...