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chapter 5

Chapter 5

CORPORATE GOVERNANCE

In the last chapter , we had been through some issues of Corporate social responsibility .In this chapter we will continue to learn more about Corporate Governance .

We begin the topic with define and explain the term corporate governance.Corporate governance is the process by which organizations are directed and controlled .Using a series of board and committees ,corporate governance is design to oversee the running of a company by its managers and to ensure that the interests of all the stakeholders are fairly represented and treated.Good corporate governance plays a vital role in underpinning the integrity and effeciency of financial market.Poor corporate governance weakens a company’s potential and at worst can pave the way for financial difficulties and even fraud .If companies are well governed ,they will usually outperform other companies and will be able to attract investor whose support can finance further growth .

We continue to understand the responsibilities of the board of directors and the major governance committees.A board of director is a group of senior experienced executives who oversee governance of an organization.Elected by shareholder vote at the annual general meeting ,the true power of the board can vary from a powerful unit that closely monitors the management of the organization ,to a body that merely rubber stamps the deceision of the CEO and executive team.Effective corporate governance models typically include three major oversight committee ,staffed by members of the board of director and appropriately : the audit committee,the compensation and the corporate governance committee.

The audit committee is staffed by members of the board of director plus independent or outside directors ,which oversees the financial reporting process ,monitors internal controls over...