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Unit 9 Corporate Governance - Coggle Diagram
Unit 9 Corporate Governance
Internal and External Corporate Governance
Roles and responsibilities are split between the
management board and supervisory board in which type of supervisory board system?
Two-tier board system
Corporate governance refers to the legal and de facto organizational structure
for the management and supervision of a corporation.
Performance-based executive management remuneration is an internal corporate governance instrument.
Advantages
Residual costs are lowered.
Agency theory asserts that good corporate
governance leads to an increase in the value of a company.
Because capital market mechanisms can fail to
provide adequate disciplinary effects
corporate governance
To implement disciplinary measures on company
executive management if required
Legal Basis for Corporate Governance: Sarbanes Oxley Act (SOX)
It is False THat - Empirical research has indicated that the implementation of the SOX has had no effect on the quality of corporate governance and financial reporting since its introduction in 2002
The basic goals of the Sarbanes-Oxley Act are to provide transparency for the public regarding internal corporate processes,
enable early and effective identification and reduction of risks, and ensure proper corporate financial reporting standards as well as
restore the lost trust of investors.
Companies must establish and maintain internal controls and processes for the disclosure of financial information related to the company
The principal executive officer and financial officer must review all reports subject to public disclosure and verify their accuracy.
Which of the following are criticisms of the SOX?
SOX is an overreaction and results in high costs of compliance.
SOX leads to extraterritorial legislation for foreign companies listed in the US.
Effect of Corporate Governance on Company Performance and the Significance of Ownership Structures
What are the consequences of Bad Governance
The stock price for Optimize Inc. stocks will likely decrease.
A large number of Optimize Inc. shareholders are unhappy with corporate governance at the company.
They therefore decide to implement an exit strategy. What are the consequences of this?
Executive managers with remuneration linked to share price
performance will receive lower remuneration.
The stock price for Optimize Inc. stocks will likely
decrease.
Study Goals
what corporate governance means.
what the conflicts of interest are that make corporate governance necessary.
what the internal and external forms of corporate governance are.
the role of the Sarbanes Oxley Act as a legal basis for corporate governance.
how and if corporate governance affects company performance or ownership structure.