Corporate governance

Question 1

Explain corporate governance

Answer 1

Used to describe all the policies, procedures, relationships and systems in place to oversee the successful and legal operation of the enterprise

Question 2

Who are involved in CG

Answer 2

• Shareholders
• Board of Directors
• Corporate officers
• Employees

Question 3

What do shareholders do?

Answer 3

Even though ≠ direct involvement = play key role in CG

All shareholders = invited to an annual meeting where
top execs present the previous year’s results & plan for the coming year

Shareholders vote on various resolutions that may be before the board

Theory → bc shareholders elect the directors = they are the ultimate governing body of the corp
BUT major corp may have 1000s or millions of shareholders → unless they own large number of shares, individual shareholders usually have little influences

Question 4

Who are Board of Directors & what do they do?

Answer 4

Reps of shareholders
Members = responsible for:
Selecting corporate officers
guiding corporate affairs
reviewing long-term plans
making major strategic decisions
overseeing financial performance
Boards = typically composed of major shareholders (inds and reps of institutional investors) and executives from other corps

Question 5

Issues w/ boards

Answer 5

• Composition
• Education
• Liability
• Independent board chairs
• Recruiting challenges

Question 6

Who are corporate officers

Answer 6

Top execs who run a corporation

The highest ranking officer = Chief Executive Officer (CEO) & is aided by a team of other “C- level” executives like
Chief Financial officer (CFO)
Chief Information officer (CIO)
Chief technology officer (CTO) 
Chief operating officer (COO) 

Eventually will appoint next level of managers who will employ the employees of the company etc