Chapter 1 Principle And Issues In Corporate Governance

Question 1

What is meant by corporate governance

Answer 1

A system by which companies are directed and controlled

Question 2

Corporate governance framework

Answer 2

Legislation
Codes
Policy’s
Company structure

Question 3

Framework of corporate governance

Answer 3

Rules based approach
Hybrid approach
Principles based approach

Question 4

Principle based approach is

Answer 4

A voluntary set of rules like comply or explain

Question 5

Good governance is RAFT

Answer 5

Transparent
Accountable
Fair
Relaible

Question 6

Theories of corporate governance

Answer 6

Agency theory - management
Principle theory - shareholders
1. Shareholder primacy theory
2. Stakeholder theory
S172 seeks to combine the two

Conflicts are:
Moral hazard
Earning retention
Time horizon
Level of effort

Question 7

Approach’s of corporate governance

Answer 7

Shareholder approach
Stakeholder approach
Inclusive shareholder approach
Enlightened shareholder approach

Question 8

Difference between the shareholder vs stakeholder approach

Answer 8

1. Maximum wealth for its shareholders v creating opportunities for employees
2. Self/interested wealth maximisers vs diverse with difference objectives, time horizons and preferences
   3.

Question 9

S171

Answer 9

Act with their powers

Question 10

S172

Answer 10

To promote the success of the company

Question 11

S177

Answer 11

Declare any interests in a proposed transaction

Question 12

S173

Answer 12

Independent judgement

Question 13

S174

Answer 13

Must act with reasonable care, skill and diligence

Question 14

S175

Answer 14

Avoid conflicts of interest

Question 15

S176

Answer 15

Not to accept gifts from third parties