Corporate Governance - Chapter 1

Question 1

Define governance

Answer 1

It is a process whereby the elements in society wield power, influence, and authority and enact policies and decisions concerning PUBLIC LIFE and SOCIAL UPLIFTMENT.

Question 2

What should be the benefit of governance?

Answer 2

Governance should be to the benefit of the public.

Question 3

In the art of governance, what is it in traditional parlance? What is actual governance?

Answer 3

In traditional parlance, governments RULE and CONTROL, whereas in actual governance, they ORCHESTRATE and MANAGE.

Question 4

Distinguish the act of ruling from orchestrating in the art of governance.

Answer 4

To rule is to be the sole authority, for which the appropriate response is to obey. To orchestrate is to call to everyone to play a part in moving the society.

Question 5

Distinguish the act of controlling from managing in the art of governance.

Answer 5

To control is to direct what each part of the system must do. To manage is to be open to inputs of others, which might provide new info and methods other than those originally promulgated that could lead to the fulfillment of a specific goal.

Question 6

List down the key actors in governance.

Answer 6

1. The state
2. The civil society
3. The market

Question 7

What key actor is being focused on in corporate governance.

Answer 7

The market

Question 8

Explain the state as a key actor.

Answer 8

The state as a key actor creates a favorable political, legal, and economic environment. It constitutes the government and its sectors.

Question 9

Explain the civil society as a key actor.

Answer 9

The civil society as a key actor mobilizes people’s participation. The civil society constitutes different NGOs and other private organizations concerned with particular causes of concern.

Question 10

Explain the market as a key actor.

Answer 10

The market as a key actor opens opportunities for people, constituting private entities run by businesses and other important organizations in the market.

Question 11

Can the three key actors’ role mobilize intersect with each other?

Answer 11

Yes

Question 12

List down the characteristics of good governance.

Answer 12

1. Participatory
2. Follows the rules
3. Transparent
4. Responsive
5. Consensus oriented
6. Equity and Inclusiveness
7. Effectiveness and Efficiency
8. Accountable

Question 13

In the governance characteristic pertaining to the quality of following the rules, what rule should actually be followed?

Answer 13

Rule of law

Question 14

What is the requisite of being responsive?

Answer 14

Timing

Question 15

In being consensus oriented, those who govern should carefully consider the collective inputs of many people. How should this be approached?

Answer 15

It must be carefully considered to ensure the actions based on these inputs do not result in either abuse or prejudice of one’s own rights. There must be balance in the process of decision-making and also the effects on the rights of the parties involved.

Question 16

Define corporate governance. What do they also require?

Answer 16

It is the system of RULES, PRACTICES, and PROCESSES by which business corporations are directed and controlled.
They also require faithful or fair presentation and relevance of financial statements.

Question 17

In corporate governance, what are those that serve as the framework or skeleton that direct and control business corporations?

Answer 17

Policies and organizational structure

Question 18

What are the purposes of corporate governance?

Answer 18

1. Facilitate effective, entrepreneurial, and prudent MANAGEMENT that can deliver long-term SUCCESS of the company.
2. Enhance SHAREHOLDER’S VALUE and protect the INTEREST OF STAKEHOLDERS by improving corporate PERFORMANCE and ACCOUNTABILITY.
3. Set the VALUES of the business firm.

Question 19

What is the consequence of having no corporate governance?

Answer 19

There will be mismanagement, which will not lead to long-term success.

Question 20

How can stakeholders be defined?

Answer 20

They are those who are at stake in the DECISION-MAKING process of the corporation and in its FINANCIAL PERFORMANCE.

Question 21

Who are those stakeholders who require compliance to standards, seeing to it whether financial statements are fairly or faithfully presented and relevant?

Answer 21

Regulators

Question 22

What enhances accountability?

Answer 22

Transparency

Question 23

What three characteristics of good governance go hand-in-hand?

Answer 23

Transparency, accountability, follows the rule

Question 24

What are the objectives of corporate governance?

Answer 24

1. Fair and equitable TREATMENT of shareholders.
2. Self-assessment
3. Increase shareholder’s WEALTH
4. Transparency and full disclosure

Question 25

What does full disclosure require?

Answer 25

Transparency

Question 26

How does corporate governance work?

Answer 26

“There is no simple universal formula for good governance.”

The essence of any system of good corporate governance is to allow the board and management the freedom to DRIVE their organization FORWARD and to EXERCISE that freedom within a framework of effective accountability.

Question 27

“The ____ of the top is important because they are _____.”

Answer 27

tone; drivers

Question 28

To whom do the shareholders/owners delegate responsibilities in a public corporation?

Answer 28

1. Board of directors
2. Executive management
3. Operational management
4. Internal auditors

Question 29

To whom are those having responsibilities delegated to them accountable?

Answer 29

The stakeholders, namely:
1. Shareholders/owners
2. External auditors
3. Regulators
4. Society and others

Question 30

Define corporate social responsibility.

Answer 30

Corporate social responsibility is the accountability a corporation should have toward its profits, the people, and the planet.

Question 31

Explain the “piercing of a corporate veil.”

Answer 31

It refers to a situation where the courts ignore the corporation’s limited liability and hold its shareholders or directors personally liable for its actions or debts.

Question 32

Define the role of the board of directors in a public corporation?

Answer 32

They are concerned with significant matters relevant to the long-term implications of the business, by means of brainstorming different ideas to manage these concerns.

Question 33

Define the role of the executive management in a public corporation?

Answer 33

They are the ones responsible for bigger decision-making processes and executing and implementing strategies to reach the long-term objectives and goals devised by the board of directors.

Question 34

Define the role of the operational management in a public corporation.

Answer 34

They are concerned with overseeing the day-to-day operation with the corporation.

Question 35

Define the role of internal auditors in a public corporation?

Answer 35

They are responsible for the corporation’s internal control.

Question 36

How can a corporation be classified public?

Answer 36

It can be classified by these conditions:
1. It has many stakeholders.
2. It exchanges its stocks externally.
3. It is publically listed in the Securities and Exchange Commission.