Corporate Governance
Investor confidence - answer Key driver for facilitating efficient allocation of a scarce
resource of capital, enabling public companies to raise capital for establishing their
business, providing a safe marketplace for investment, and helps ensure companies are
transparent
21st century loss of investor confidence - answer High profile financial scandals,
economic downturn, September 11 attacks, ineffectiveness of market mechanisms,
investors demand protection though regulation and transparency
Role of financial information in the capital markets - answera) The sustainability of
public companies is key to keeping investor confidence high
b) Financial disclosures under security exchange regulations are necessary to provide
investors with reliable information, so they can make informed decisions
Goal of corporate governance - answer Create a right balance of power sharing among
all participants
Key corporate gate keepers - answera) An independent and competent board
b) An independent and competent auditor
c) Objective and competent legal counsel
d) Objective and competent financial advisors
Corporate governance - answerThe process affected by a set of legislative, regulatory,
legal, market mechanisms, listing standards, best practices, and efforts of all corporate
governance participants, including the company's directors, officers, auditors, legal
counsel, and financial advisors, which creates a system of checks and balances with
the goal of creating and enhancing and sustainable shareholder value, while protecting
the interests of other stakeholders
Aspects of corporate governance - answerShareholder aspect, stakeholder aspect,
integrated aspect
Shareholder aspect - answerIs based on the promise that shareholders provide capital
to the corporations that exists for their benefit. Management interests should align with
shareholders.
Stakeholder aspect - answerCompany performance on a variety of economic,
governance, ethical, social and environmental issues
Investor confidence - answer Key driver for facilitating efficient allocation of a scarce
resource of capital, enabling public companies to raise capital for establishing their
business, providing a safe marketplace for investment, and helps ensure companies are
transparent
21st century loss of investor confidence - answer High profile financial scandals,
economic downturn, September 11 attacks, ineffectiveness of market mechanisms,
investors demand protection though regulation and transparency
Role of financial information in the capital markets - answera) The sustainability of
public companies is key to keeping investor confidence high
b) Financial disclosures under security exchange regulations are necessary to provide
investors with reliable information, so they can make informed decisions
Goal of corporate governance - answer Create a right balance of power sharing among
all participants
Key corporate gate keepers - answera) An independent and competent board
b) An independent and competent auditor
c) Objective and competent legal counsel
d) Objective and competent financial advisors
Corporate governance - answerThe process affected by a set of legislative, regulatory,
legal, market mechanisms, listing standards, best practices, and efforts of all corporate
governance participants, including the company's directors, officers, auditors, legal
counsel, and financial advisors, which creates a system of checks and balances with
the goal of creating and enhancing and sustainable shareholder value, while protecting
the interests of other stakeholders
Aspects of corporate governance - answerShareholder aspect, stakeholder aspect,
integrated aspect
Shareholder aspect - answerIs based on the promise that shareholders provide capital
to the corporations that exists for their benefit. Management interests should align with
shareholders.
Stakeholder aspect - answerCompany performance on a variety of economic,
governance, ethical, social and environmental issues
