Chapter 13 - Other Governance Issues Flashcards

1
Q

What are the concepts on which King IV is based?

A
  • ethical leadership
  • corporate citizenship
  • sustainable development
  • stakeholder inclusivity
  • integrated thinking
  • integrated reporting
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2
Q

In what way is the King IV Code unusual?

A

It adopts a “stakeholder inclusive approach” to governance, whereas other codes (including the UK Code) usually take a shareholder or enlightened shareholder approach.

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3
Q

What is the US’ main law on corporate governance?

A

The Sarbanes Oxley Act 2002

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4
Q

What are the main requirements of s 404 of the SOX in the US?

A

Companies must include an internal control report in their annual report.

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5
Q

What are the 4 key consequences of the SOX regime?

A
  • created a central oversight board for audit services
  • sets standards for independence of external auditors
  • senior executives must take responsibility for financial reporting
  • new rules relating to internal control
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6
Q

What are the key criticisms of s 404 SOX?

A

Takes up too much time, and gives too much liability to CEOs/CFOs, thereby deterring foreign companies from listing shares in the US.

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7
Q

Why should institutional investors want companies to comply with codes of governance?

A

In order to protect and develop sustainable corporate value.

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8
Q

To which group do the Nolan Principles Apply?

A

The public sector

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9
Q

What are the Nolan Principles for Public Life?

A
1 Selflessness
2 Integrity
3 Objectivity
4 Accountability
5 Openness
6 Honesty
7 Leadership
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10
Q

How do governments differ from companies in their governance requirements?

A

1 Government departments and stock market companies have different requirements
2 Ownership structures are different

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11
Q

What is the code of best practice for central government called?

A

Corporate governance in central government departments: code of good practice 2011.

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12
Q

What are the principle of the Charity Governance Code?

A
1 Organisational purpose
2 Leadership
3 Integrity
4 Decision making , risk and control
5 Board effectiveness
6 Diversity
7 Openness and accountability
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13
Q

Why might governance be a particular problem for charities?

A

Part-time boards of trustees may find it difficult to perform effectively.

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14
Q

What governance guidance is available to unlisted companies?

A

The IOD Guidance for Unlitsed Companies.

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