Corporate Governance Key Actors Flashcards
are the owners of the business. They are responsible for providing the business with capital. They benefit the most from success and lose the most from failures.
Shareholders
They do not vote on company matters but receive a steady dividend that is paid ahead of common stock shareholders.
Preferred Stockholders
They elect directors to the board, vote on company matters, entitled to a dividend.
Common stock shareholders
Represent big organizations and buy large volumes of shares that affect the sharing price.
Institutional Investors
trade in smaller volumes and usually constitute minority shareholding.
Individual investors
A board of directors consists of individuals who are elected to represent the interest of the shareholders. They establishes policies to guide the management and responsible for making major strategic decisions.
The Board
7-9
Ideal size of board of directors.
Executive
Non-eXecutive
Two Types
interrelated. May pursue own interest and cover each other. Blamed for the American scandals.
Old Boys/ Girl Club
management makes all the decisions with the board approving all without any further consideration
Rubber Stamp
Agrees with everything management does.
Yes Men
no involvement at all.
- only exist by name.
Phantom
previews selected issues.
Country club
minimum level of board involvement.
Trophy
plays a leading role in strategic planning and monitoring of implimentation.
Real thing
represented by the CEO implement board directives ensuring the company operates efficiently, implements the strategies, and prepares financial and other reports.
Management
CEO’s responsibilities in 5 broad areas.
- Meetings
- Directors and Senior Management
- Key Responsibilities
- Relations with shareholders
- Other responsibilities
they are among the stakeholders that play an important role in the long term success of the company. Good relations between employees and management facilitate good performance and realization of shareholder objectives.
Employees
they are part of corporate governance stakeholders as they tend to take action against those organization deemed to violate acceptable practices.
NGOs and Advocacy Groups
they influence corporate governance as they may decide to boycott its products and or services if it is non-compliant, with standards, guidelines, and legal requirements.
Customers
They are the player in a company’s corporate governance as customers both existing and potential have their buying decisions influenced by the seller’s products or input source markets.
Suppliers
We link corporate governance with liquidity, trading activity, and the clientele that holds the firm’s stock.
Financial Markets
a major stakeholder in influencing corporate governance practices. They expect business to plough back profits through corporate social responsibility initiatives and operate in socially responsible manner.
Community
Employee Participation in Corporate Governance
- right to consultation on major company developments that may affect their livelihood.
- collective bargaining
- boards to consider other stakeholder interests.
- right to nominate for supervisory board.
- opportunities for employee share ownership.
