Corporate Governance

976 Words Mar 29th, 2005 4 Pages
Corporate Governance
Corporate Governance is the relationship between the shareholders, directors, and management of a company, as defined by the corporate character, bylaws, formal policies and rule laws. The corporate governance system was designed to help oversee the decisions and best interest of the shareholders. The system should works accordingly: The shareholders elect directors, who in turn hire management to make the daily executive decisions on the owner 's behalf. The company 's board of director 's position is to oversee management and ensure that the shareholders interest is being served. Corporate governance focus is with promoting enterprise, to improve efficiency, and to address disputes of interest which can force
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Several firms are focusing on the voting and nominating procedure as one way to improve corporate governance. The new Nasdaq rule is another way they are looking to improve corporate governance in the future. According to this rule corporation have to get there act together and buckle down and abide by the new rule if it is passed. After the new regulations are approved, companies will have two years to make all the appropriate changes or take a chance of getting removed from the NYSE list of stock exchange. If a letter of reprimand is issued or if removal of stock form the NYSE occur, it will bring a lot of public attention on the companies that are acting according. This attention may give investors a negative reaction on the company and they may slowly start pulling away from the company. This new Nasdaq rule is suppose to make investors and the public aware of what is happening with the company weather its conflict of interest or other corporate abuse. They also believe it will give investors more confidence in the companies that they invest their money in.
The new rule should prevent a bad company from showing dishonest behavior. Many agree that there will not really be a change for companies that are doing business correctly already. All it really will do is show the
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