corporate governance prentice hall 2006
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Corporate Governance The relationship among the board of directors, top management, and shareholders – determining the direction and performance of the corporation Prentice Hall 2006TRANSCRIPT
Corporate Governance Prentice Hall 2006 Corporate Governance The
relationship among the board of directors, top management, and
shareholders determining the direction and performance of the
corporation Prentice Hall 2006 Corporate Governance Board of
Directors A body of appointed persons who jointly oversee the
activities of a company or organization A board's activities are
determined by the powers, duties, and responsibilities delegated to
it or conferred on it by an authority outside itself. These matters
are typically detailed in the organization's bylaws. Bylaws
commonly specify the number of members of the board, how they are
to be chosen, and when they are to meet. Prentice Hall 2006 Role of
Board Monitor Evaluate and influence Initiate and determine
Corporate Governance Role of Board Monitor Evaluate and influence
Initiate and determine Prentice Hall 2006 Board of Directors
Continuum
Prentice Hall 2006 Members -- Inside directors Outside directors
Management directors
Board of Directors Members -- Inside directors Management directors
Officers or executives employed by the firm Outside directors
Non-management directors Executives of other firms not employed by
the boards corporation Prentice Hall 2006 Agency Problem Risk
Sharing Problem
Agency Theory Agency Problem Objectives of owners & agents in
conflict Difficult for owners to verify agent performance Risk
Sharing Problem Owners & agents risk assessment in conflict
Prentice Hall 2006 Stewardship Theory Executives more motivated to
act in best interest of the corporation than their own
self-interests.Theory that over time, senior executives tend to
view corporation as extension of selves. Prentice Hall 2006 When
Outsiders can be considered Insiders
Board of Directors When Outsiders can be considered Insiders
Affiliated Directors Retired Directors Family Directors Prentice
Hall 2006 Board of Directors Codetermination The inclusion of a
corporations employees on its board of directors Prentice Hall 2006
Nominations & Elections
Board of Directors Nominations & Elections Traditional Approach
CEO invitation to membership Shareholders approval in annual proxy
statement All nominees usually elected Prentice Hall 2006 Corporate
Governance Review & shaping of strategy
Board of Directors Corporate Governance Review & shaping of
strategy Pressure for corporate performance Demand for executive
stock ownership Outside directors increasing Prentice Hall 2006
Transformational leaders
Board of Directors Transformational leaders Change agents through
vision for change Prentice Hall 2006 Successful CEOs Strategic
vision Passion for the company
Board of Directors Successful CEOs Strategic vision Passion for the
company Strong communication Charisma Prentice Hall 2006 Executive
Leadership Strategic vision Role model Board of Directors
Prentice Hall 2006 Executive Leadership Communication of
performance standards
Board of Directors Executive Leadership Communication of
performance standards Demonstrates confidence in abilities of
followers Prentice Hall 2006