An example of good corporate governance is:Group of answer choicessetting up an audit committee.appointing only current or past executives as directors.giving top management large salary increases.having no independent directors.
Question
An example of good corporate governance is:Group of answer choicessetting up an audit committee.appointing only current or past executives as directors.giving top management large salary increases.having no independent directors.
Solution
An example of good corporate governance is setting up an audit committee.
Here's why:
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An audit committee is a group of individuals selected from the company's board of directors. The main responsibility of this committee is to oversee the company's financial reporting process and disclosure of its financial information.
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The audit committee ensures that the company's financial statements are accurate, complete, and in accordance with the laws and regulations. They also oversee the performance of the company's internal audit function and independent auditors.
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This committee also reviews the company's financial policies, its internal control systems, and risk management policies.
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By setting up an audit committee, a company can ensure that it is following good corporate governance practices. This can help to increase the trust and confidence of the company's stakeholders, including its shareholders, employees, and the public.
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On the other hand, appointing only current or past executives as directors, giving top management large salary increases, and having no independent directors are not considered good corporate governance practices. These actions can lead to conflicts of interest and can harm the interests of the company's stakeholders.
Similar Questions
Corporate governance is best defined as: the system of controls, regulations, and incentives designed to prevent fraud and minimize conflicts of interest in a corporation. the system of laws and regulations that control corporations. the system that minimizes agency costs between bondholders and stockholders. the system that determines who controls and runs a corporation.
Good corporate governance involves a __________ to run businesses in a legal manner.a.decisionb.requirementc.commitmentd.plan
Good governance signifies improved ____________of the company in the society.a.reputationb.profitabilityc.relationsd.efficiency
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Which of the following statements is FALSE? Corporate governance is a system of checks and balances that trades off costs and benefits. The costs and benefits of a corporate governance system also depends on cultural norms. It is important to keep in mind that good governance is value enhancing and so, in principle, is something investors in the firm should strive for. Because good governance is based upon a basic set of principles, one should expect all firms to display similar governance structures.
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