The Principal Players And Influencers Within Corporations That Monitor, And Control The Financial And Operational Activities That Shape

1492 WordsOct 26, 20156 Pages
Abstract The main purpose of this paper is to analyze the principal players and influencers within corporations that monitor, and control the financial and operational activities that shape corporate governance outcomes. The role that boards of directors, auditors, rating agencies, security analysts, accountants, and creditors play within corporate operational activities will be the central component of our analysis. Particular focus will be placed on the duty of the board of directors to act in the company’s “best interest” as well as the execution of quality auditing, that auditors are charged to produce. We’ll examine the positive attributes and potential risks that these principal agents present as I provide my assessment of three…show more content…
The expansion and conversion of ownership from private to public created a need to protect the general shareholder, and placed an emphasis on doing what’s in the “best interest” of the company. This focus on the “best interest” usually starts from the top down with the board of directors. The Gatekeepers of Corporate Governance Boards of Directors are mandated by business law to carry out their responsibilities with the notion of operating in the best interest of the corporation. This is largely interpreted as operating “in the best interest of the shareholder” or maximizing shareholders value. “However, there are situations in which the company’s “best interest” doesn’t match the best interest of its shareholders. It’s left to boards of directors to make these company “best interest” decisions.” (Gillan, and Starks, 2000) Boards of directors are made up of two kinds of agents: inside and outside directors (independent directors). Inside directors are employees of the company, usually company CEO’s, CFO’s, and/or other high level company executives. Inside directors are held accountable for authorizing budgets created by company executives, creating and overseeing the company’s business policy, and authorizing important corporate plans and ventures. Outside directors are chosen externally; they’re non-employees. The sole reason for having independent directors on boards is to add

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