CSR_Module 5 Flashcards
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CSR_Module 5 Flashcards
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What does fairness refer to in corporate governance?
Equal treatment, shareholders receiving equal consideration based on their shareholdings, fair treatment of all stakeholders.
What does corporate accountability refer to in corporate governance?
Obligation to explain company's actions, presenting a balanced assessment, employing risk management, and communicating with stakeholders.
What is the responsibility of the Board of Directors in corporate governance?
To oversee management, appoint the CEO, monitor performance, assume complete responsibility, and exercise authority accordingly.
What does transparency refer to in corporate governance?
Company's openness to disclose clear information, timely and accurate disclosure of material matters, ensuring stakeholders have confidence in decision-making processes.
What are the characteristics of good corporate governance?
Participatory, Consensus-Oriented, Accountable, Transparent, Responsive, Equitable and Inclusive, Efficient and Effective, Follows the Rule of Law
What are the 4Ps of Corporate Governance?
People, Purpose, Process, Performance
How can people help clarify the people orientation of an organisation's corporate governance scheme?
People associated with the organisation including investors, shareholders, employees, society, government, etc.
What should the organisation's purpose be for good corporate governance?
Measurable, actionable, communicated well, based on shared organizational values
What does the Process in 4Ps of Corporate Governance include?
Process management, process compliance, process innovation
What should be measured, analysed, and communicated for good corporate governance according to the 4Ps?
Performance
What are the benefits of good corporate governance for businesses?
Takes into account the needs of all stakeholders, creates transparency, creates a good corporate image, sustains corporate social responsibility, ensures ethical business activities
What benefits does good corporate governance provide to organizations?
Employees show commitment, government extends exemptions, improves reputation in society, increases repeat business from customers, decreases conflicts and fraud
What benefits do various parties involved get from good corporate governance?
Better informed shareholders, fair employment policies, high-quality products at fair prices for customers, maximised investors' return on investment, benefits for society due to social and environmental activities
What are some issues involving corporate governance principles related to internal controls and internal auditors?
Ensuring proper oversight and adherence to internal control procedures by auditors.
What is an issue involving corporate governance principles related to the independence of the entity's external auditors and the quality of their audits?
Ensuring independence of external auditors and the quality of their audits for unbiased assessment.
What is a key issue in corporate governance principles related to oversight and management of risk?
Proper oversight and management of risks to protect the interests of stakeholders.
What is an important issue in corporate governance principles related to the oversight of the preparation of company financial statements?
Ensuring accurate and transparent financial reporting for stakeholders' trust.
What is a significant issue in corporate governance principles related to the review of the chief executive officer's compensation arrangements?
Ensuring fair and appropriate compensation for the CEO based on performance and market standards.
What is an issue in corporate governance principles related to the review of senior executives' compensation arrangements?
Ensuring fair and competitive compensation packages for senior executives to align with company goals.
What is a concern in corporate governance principles related to the resources available to directors to perform their duties effectively?
Ensuring directors have adequate resources and support to carry out their responsibilities efficiently.
What is an issue in corporate governance principles related to the way individuals are nominated for board positions?
Ensuring a transparent and fair nomination process for board positions to maintain diversity and expertise.
What is a key issue in corporate governance principles related to dividend policy?
Establishing a fair and sustainable dividend policy that balances shareholder returns and company growth.
What is the Agency Theory used for?
To understand relationships between agents and principals in corporate governance.
Who does the agent represent in a business transaction according to the Agency Theory?
The principal.
What is the expectation regarding the agent's representation of the principal's interests?
The agent is expected to represent the best interests of the principal without regard for self-interest.
What can diverging interests of principals and agents lead to according to the Agency Theory?
Conflict and potential inefficiencies or financial losses.
What is the principal-agent problem in the context of the Agency Theory?
Conflicts of interest between principals and agents that may lead to inefficiencies and financial losses.
How can corporate governance address the principal-agent problem according to the Agency Theory?
By changing the rules under which an agent operates to restore the principal's interests.
What challenge does the principal face regarding the agent's performance of tasks according to the Agency Theory?
Lack of information about the agent's performance.
How can agents be incentivized to act in favor of the principal's interests according to the Agency Theory?
By designing appropriate incentives that consider the interests motivating the agent to act.