Outline for a Speech
Chapter 1
Review Questions
1. What is the primary goal of corporate governance? To create a balance of power-sharing among shareholders, directors, and management to enhance shareholder value and protect the interests of other stakeholders.
2. What is the primary mission of a public company? To create sustainable and enduring shareholder value.
3. What is the role of a corporate governance gatekeeper? To align management’s interests with those of long-term shareholders and to protect investors from misleading financial information published in public filings.
4. Corporate governance reforms and best practices require the establishment of what four key gatekeepers to deal with the perceived agency problems of asymmetric information between management and investors and to improve the quality of public financial information? (1) Independent and competent board of directors; (2) independent and competent external auditor; (3) objective and competent legal counsel; and (4) objective and competent financial advisors and investment bankers.
5. How does an effective corporate governance structure improve investor confidence? It ensures corporate accountability, enhances the reliability and quality of public financial information, and enhances the integrity and efficiency of the capital market.
6. What is the primary intent of corporate governance reforms? To improve: • The reliability, integrity, transparency, and quality of financial reports. • The effectiveness of internal controls over financial reporting and related risk management assessment. • The credibility of the external audit function. • The independence and objectivity of other gatekeepers such as legal counsel and financial analysts. • Shareholder monitoring and democracy.
7. What benefits are obtained by the proper implementation of SOX? • Improved corporate governance. • Enhanced quality, reliability,
Review Questions
1. What is the primary goal of corporate governance? To create a balance of power-sharing among shareholders, directors, and management to enhance shareholder value and protect the interests of other stakeholders.
2. What is the primary mission of a public company? To create sustainable and enduring shareholder value.
3. What is the role of a corporate governance gatekeeper? To align management’s interests with those of long-term shareholders and to protect investors from misleading financial information published in public filings.
4. Corporate governance reforms and best practices require the establishment of what four key gatekeepers to deal with the perceived agency problems of asymmetric information between management and investors and to improve the quality of public financial information? (1) Independent and competent board of directors; (2) independent and competent external auditor; (3) objective and competent legal counsel; and (4) objective and competent financial advisors and investment bankers.
5. How does an effective corporate governance structure improve investor confidence? It ensures corporate accountability, enhances the reliability and quality of public financial information, and enhances the integrity and efficiency of the capital market.
6. What is the primary intent of corporate governance reforms? To improve: • The reliability, integrity, transparency, and quality of financial reports. • The effectiveness of internal controls over financial reporting and related risk management assessment. • The credibility of the external audit function. • The independence and objectivity of other gatekeepers such as legal counsel and financial analysts. • Shareholder monitoring and democracy.
7. What benefits are obtained by the proper implementation of SOX? • Improved corporate governance. • Enhanced quality, reliability,