Chapter 4 - Main aspects of corporate governance

Question 1

What is corporate governance?

Answer 1

A system by which organisations are directed and controlled.

Question 2

What are some commonly adopted principles of corporate governance?

Answer 2

• Companies should respect shareholders rights and help shareholders to exercise them
• Companies should recognise that they may have obligations to other stakeholders
• The board needs the skills and understanding to review and challenge management performance
• Companies should develop a code of conduct for their directors and managers that promotes ethical and responsible decision-making
• Companies should make public the roles and responsibilities of teh board and management to provide shareholders with a level of accountability
• Companies hsould have procedures to independantly verify their financial reporting