9: Governance and ethics

Question 1

What is governance?

Answer 1

Governance is the system by which organisations are directed and controlled

Question 2

Which of these is NOT an impact of poor governance?

Company failure
Reputation damange may result in shareholders losing faith in the company and selling shares
Poor quality workforce
Criticism of accountants and auditors

Answer 2

Poor quality workforce

Question 3

Describe simply the agency relationship / agency problem

Answer 3

The agency problem occurs when managers pursue their own objectives rather than those of the shareholder

Question 4

What are the two types of financial systems

Answer 4

Bank based financial system
Market based financial system

Question 5

One type of board structure is dual board. The board is split into…?

Answer 5

Management board and supervisory board

Question 6

Corporate governance is…

Answer 6

Corporate governance is a set of relationships between a company’s management, its board, its shareholders and other stakeholders that provides the structure through which the objectives of the company are set, attained and monitored.

Question 7

Which two are principles in the Wates Principles?

Board composition
Board committees
Director responsibilities
Protection of minority shareholders
Reporting and transparency

Answer 7

Board composition
Director responsibilities

Question 8

Is ‘end poverty’ an aim under the UN Global Goals for sustainable development?

Answer 8

Yes