In one word, describe corporate governance.
Corporate governance is the system of rules, practices, and processes that a company follows to ensure it is managed in an ethical and legal manner. It is a set of systems and procedures that exist to direct and control how a company is managed and operated. Good corporate governance is essential for a company's success and survival.
What is Corporate Governance?
Corporate Governance: The system by which corporations are directed and managed. This system typically involves a board of directors, executive officers, and shareholders who work together to ensure the company’s success. Board of Directors: A body of elected or appointed members who oversee the activities of a company and are responsible for its long-term success. Shareholder: An individual or organization that owns shares of stock in a corporation and is therefore entitled to a portion of the corporation’s profits or assets.
In recent years, corporate governance has become increasingly important as it helps to ensure the long-term success of a company. The Sarbanes-Oxley Act of 2002 was the first major US federal law on corporate governance, following a series of corporate scandals. Corporate governance is not only important for the protection of shareholders, but also for the protection of other stakeholders such as employees, customers, and the environment.
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Work together in pairs: What are the potential benefits for a company that has strong corporate governance practices in place?
What are some key principles and practices of effective corporate governance, and how do they contribute to the overall success and stability of a company?
Work together in pairs: What is the purpose of corporate governance and what strategies can companies use to ensure its success?
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What is the primary objective of corporate governance?
- Maximizing shareholder profits
- Ensuring transparency and accountability
- Minimizing employee turnover
Which of the following is a key principle of good corporate governance?
- Integrity and ethical behavior
- Short-term financial gains
- Aggressive cost-cutting measures
What does the board of directors oversee in corporate governance?
- Marketing campaigns
- Daily operational tasks
- Strategic decision-making
What is the role of independent auditors in corporate governance?
- To manage employee benefits programs
- To provide an unbiased assessment of financial statements
- To handle shareholder disputes
Which entity sets guidelines and regulations for corporate governance practices?
- Federal Reserve System (Fed)
- World Health Organization (WHO)
- Securities and Exchange Commission (SEC)