The Impact Of Senior Management On Corporate Governance

989 Words Jun 19th, 2015 4 Pages
(1) All-Powerful CEO
Back in 1985, a venture-capital firm Hambrecht & Quist invested in MiniScribe, and Mr. Wile was selected as the chairman. After that, he eliminated one fifth of MiniScribe’s work force and overhauled the company from top to bottom. In addition, he held his divisional managers accountable, which show us that Mr. Wile had unending control to the company. Although the Board later was restructured to include new members, they either worked for or were affiliated with Mr. Wile and the Hambrecht & Quist group. All of these phenomenon indicate a powerful CEO, which is harmful for a company’s healthy operation. Further, during his tenure, he usually managed MiniScribe from California, which gave him seldom chances to oversee real company operation. Besides, since he held several similar positions at the same time, he can’t devote all his energy to MiniScribe. Evidences in several forms have suggest that senior management was involved in fraudulent financial reporting activities, which indicates a failure of corporate governance.
(2) Weak System of Management Control
Since Mr. Wile is a powerful CEO, the management style of MiniScribe is very personal. As the reason of frequent reorganization and reassignment, the senior managers often did not have the necessary experience or educational training to perform their jobs. This can be consider as one indicator of weak control because the decisions from these managers who did not have the capacity to perform the work…
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