Focus on: Governance and Business Ethics (5–15%)
CORPORATE/ORGANIZATIONAL GOVERNANCE PRINCIPLES
Corporate Governance Definition
Corporate governance refers to the method by which a firm is being governed, directed, administered, or controlled and to the goals for which it is being governed. It is concerned with the relative roles, rights, and accountability of such stakeholder groups as owners, boards of directors, managers, employees, and others who assert to be stakeholders.
Corporate Governance Principles
Principle I: Ensuring the Basis for an Effective Corporate Governance Framework
Principle II: The Rights of Shareholders and Key Ownership Functions
Principle III: The Equitable Treatment of Shareholders
Principle IV: The Role of Stakeholders in Corporate Governance
Principle V: Disclosure and Transparency
Principle VI: The Responsibilities of the Board
Corporate Governance Issues
- Components of corporate governance (i.e., shareholders, board of directors, management, and employees).
- Separation of ownership from control.
- Role of the board of directors.
- Need for board independence.
- Issues surrounding compensation. Major issues include CEO compensation (e.g., salaries, bonuses, stock options, and perks) and outside director compensation.
- Consequences of merger, acquisition, and takeover wave and divestiture of assets.
- Insider trading scandals.
- Board member liability.
- Lack of strong voice for board of directors due to their submissive behaviors
- Improving corporate governance: ...