Assignment #3. 1.Corporate Governance Is A Set Of Rules

1376 WordsFeb 6, 20176 Pages
Assignment #3 1. Corporate Governance is a set of rules enforced in a company to have control and be led in a certain direction. Corporate Governance balances interests of stakeholders, and the corporation’s objectives. Corporate Governance aims to manage “action plans and internal controls” to measure a company’s “performance and corporate disclosure.” Corporate Governance is important to every American citizen for various reasons. Bad governance of a company makes the company unreliable, such as participation in illegal activities. Corporate Governance is mainly to build trust of American people to invest in companies. Corporate governance became a major issue in 2002 after the Sarbanes-Oxley Act. The Sarbanes-Oxley Act was formed…show more content…
Diversity of a corporate board is important in terms of varying skill sets and experience of board members. The diversity brought by different board members allows a contrast in perspectives and opinions on how the benefit the corporation. A corporate board should have a separate director (with explicit rules and regulations) that is capable of properly managing. The director must also be capable to decide whether it is the corporation’s best interest to have CEO participation with a corporate board. Also, the board of directors make decisions for shareholders “as a fiduciary,” while seeking commercial stability of the company. The board of directors is in charge of hiring and firing executives. A poor structured board makes it almost impossible to fire ineffective officials, (Staff, page 1). To clearly see the accounting of a corporation, no corporation should stray away from clearly explaining the corporation’s accounting outcomes. The calculating of corporate incomes should always be shown in “stock-or options based on compensation.” There must be a productive commitment to engage with shareholders between company and its’ shareholders in order to have the best governing, (Commonsense Corporate Governance Principles, (n.d.), paragraph 5-9). Many executives and investors have made it their primary goal to get the most profit on quarterly earnings in contrary to long-term growth of the investments and company. At the corporate level,

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