The corporate governance issue in this article can be briefly summarised as the “dual-class stock” issue. Facebook now adopts a stock system which divides shares (and shareholders) into multiple classes. For instance, the stock structure of Facebook may consist of stocks such as Class A and Class B shares, and where the different classes have distinct voting rights and dividend payments. As mentioned in this article, the company’s chief executive directors and co-founders are given numerous unusual arrangement and control majority of the company’s voting power (for example, Mark Zuckerberg controls of about 57.1 per cent voting power). The opponents and some critical advisors believe that such governance structure is likely to diminish shareholder rights and reduce board accountability. To my point of view, the agency theory and the stakeholders’ theory can be used to describe how corporate governance applies to this article. As an American listed company, Facebook has a separate structure of ownership and management, which is high likely to arise an agency problem. The CEO, Mark Zuckerberg, has a relatively higher voting power and may misuse and abuse of power. Therefore, an integrated sound external corporate governance system (such as external auditor) is needed, as well as a well-designed internal control system (such as non-executive directors), in order to evaluate management performance and reduce risks. In addition, stakeholders’ theory emphasis on whether the company should only pay attention to shareholders or to all relevant stakeholders. In this case, due to the fact that Facebook chooses the “dual-class stock structure”, it can be easily defined that the company focuses on minor shareholders’ benefits. However, such “autocratic model of governance” is probable unsatisfied other stakeholders and leads to a reduction of investors and cause a decrease of...
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