Governance, corporate responsibility and ethics Flashcards
1
Q
Bank-based financial system
A
- Households bear little risk
- Households have less access to investments in physical assets
- Institutional shareholders are influential
- More government regulation
- Banks are highly concentrated and integrated
- Markets are more volatile
2
Q
Market- based financial systems
A
- Households bear more risk
- Greater access to investments in physical assets
- Institutional shareholders have a great deal of influence
- Markets are more important than banks for long-term
- Banks are more fragmented
- Banks have fewer close relationships with business they lend to
- comparatively unregulated
3
Q
Good corporate governance
A
- Board of directors
- Senior management
- Shareholders
- External auditors
- Internal auditors
4
Q
Poor corporate governance
A
- Domination of the board
- Inadequate control function
- Lack of supervision of employees
- Lack of scrutiny from extrnal auditors
- Emphasis on short term profitability
5
Q
Audit committee
A
- at least three (two for small companies) independent non - executive directors
- recommends external auditors
at least one has recent relevant finance experience
6
Q
Remuneration committee
A
- at least three (two for small companies) independent non - executive directors
- levels of pay should reflect time commitment and responsibilities
chair can be a member but cannot chair the committee
7
Q
Nomination committee
A
- at least three memebr, majority must be independent non - executive directors
- recommending the appoitments of both executive and non- executive member on board
8
Q
What are the objectives of corporate governance?
A
- Corporate perspective - maxmise wealth of shareholders
- Public policy perspective - objective of shareholders plus interest of other stakeholders and public at large
- Stakeholder perspective - balance between economic and social goals (align interests of shareholders with other stakeholders)
- Stewardship perspective - act in best interest of the company
