Corporate Governance Key Actors

Question 1

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.

Answer 1

Shareholders

Question 2

They do not vote on company matters but receive a steady dividend that is paid ahead of common stock shareholders.

Answer 2

Preferred Stockholders

Question 3

They elect directors to the board, vote on company matters, entitled to a dividend.

Answer 3

Common stock shareholders

Question 4

Represent big organizations and buy large volumes of shares that affect the sharing price.

Answer 4

Institutional Investors

Question 5

trade in smaller volumes and usually constitute minority shareholding.

Answer 5

Individual investors

Question 6

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.

Answer 6

The Board

Question 7

7-9

Answer 7

Ideal size of board of directors.

Question 8

Executive
Non-eXecutive

Answer 8

Two Types

Question 9

interrelated. May pursue own interest and cover each other. Blamed for the American scandals.

Answer 9

Old Boys/ Girl Club

Question 10

management makes all the decisions with the board approving all without any further consideration

Answer 10

Rubber Stamp

Question 11

Agrees with everything management does.

Answer 11

Yes Men

Question 12

no involvement at all.
- only exist by name.

Answer 12

Phantom

Question 13

previews selected issues.

Answer 13

Country club

Question 14

minimum level of board involvement.

Answer 14

Trophy

Question 15

plays a leading role in strategic planning and monitoring of implimentation.

Answer 15

Real thing

Question 16

represented by the CEO implement board directives ensuring the company operates efficiently, implements the strategies, and prepares financial and other reports.

Answer 16

Management

Question 17

CEO’s responsibilities in 5 broad areas.

Answer 17

• Meetings
• Directors and Senior Management
• Key Responsibilities
• Relations with shareholders
• Other responsibilities

Question 18

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.

Answer 18

Employees

Question 19

they are part of corporate governance stakeholders as they tend to take action against those organization deemed to violate acceptable practices.

Answer 19

NGOs and Advocacy Groups

Question 20

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.

Answer 20

Customers

Question 21

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.

Answer 21

Suppliers

Question 22

We link corporate governance with liquidity, trading activity, and the clientele that holds the firm’s stock.

Answer 22

Financial Markets

Question 23

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.

Answer 23

Community

Question 24

Employee Participation in Corporate Governance

Answer 24

• 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.