3. Corporate Governance

Question 1

Stakeholder

Answer 1

a group or individual who has an interest in what an organisation does

Question 2

Types of stakeholder

Answer 2

Internal
Connected
External

Question 3

Internal stakeholder

Answer 3

employees

managers

Question 4

Connected stakeholder

Answer 4

shareholder
customer
supplier
finance providers

Question 5

External stakeholder

Answer 5

community at large
environmental pressure groups
government
trade unions

Question 6

Ethics

Answer 6

moral principles that examine the concept of right and wrong

Question 7

CIMA code of ethics

Answer 7

COPPI
Confidentiality

Objectivity

Professional competence

Professional Behavior

Integrity

Question 8

Corporate Social Responsibility CSR

Answer 8

company should be sensitive to the needs and wants of all stakeholders

Question 9

CSR dimensions

Answer 9

Economic
Legal
Ethical
Philanthropic

Question 10

Advantages of CSR

Answer 10

Customer expectations

Brand name

Lower environmental costs

Trading opportunities

Access to staff

Investment and funding

Sustainable business

Question 11

Corporate governance

Answer 11

the system by which companies are directed and controlled

the separation of ownership and control

Question 12

Agents

Answer 12

managers act as agents of the owners (shareholders)

Question 13

Features of UK corporate governance code

Answer 13

Must hold AGM

Separate CEO and chairman

Board members must be trained at the cost of the company

Board members are independent in thought

Question 14

Independent non execs NEDS

Answer 14

should represent the shareholders

Question 15

Non exec directors NEDS

Answer 15

50% of the board

Renumeration committee

Audit committee

Question 16

Nomination committee

Answer 16

decide on appointments to the board

50% of this committee should be NEDs

Question 17

Remuneration committee

Answer 17

100% NEDs

Question 18

Audit committee

Answer 18

Consists of NEDs

internal and external auditors report to committee, committee then reports to the board

Question 19

US Sarbanes Oxley applies to companies

Answer 19

if they are part of a company listed on the US stock exchange

Question 20

Regulation

Answer 20

government interference to ensure needs of stakeholders are met and businesses act in the public interest

Question 21

Effective regulation

Answer 21

safe and effective product or service is delivered and not inhibit the function of the business

Question 22

Efficient regulation

Answer 22

total benefit to the nation is greater than the total cost

Question 23

The Competition Act 1998

Answer 23

prevents mergers creating monopolies

Question 24

The Enterprise Act 2002

Answer 24

to stop price fixing

limiting production

dividing up markets

Question 25

Corporate Political Activity (CPA)

Answer 25

Organisations can get involved by;

Buffering - lobbying government

Bridging - monitoring

Question 26

Corporate political activity is undertaken

Answer 26

to secure policy preferences

Question 27

Buffering

Answer 27

firms influencing the external environment by employing lobbyists, donations to party funds

Question 28

Bridging

Answer 28

firms may track the development of laws and regulation to have compliance in place when the legislation is passed