The analysis of corporate governance report

May 29th, 2015
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Abilene Christian University
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Typical corporate governance structures usually address issues such as: • roles of the CEO and chairman • board of directors – composition, independence, qualifications, training, remuneration and representation of shareholders • audit committee – selection and role • rights and treatment of shareholders and stakeholders • external auditors – selection, duties and liability • disclosure and transparency.

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1.1 Definitions0The need for corporate governance arises out of the divorce in modern corporations between the rights of shareholders and other suppliers of capital on the one hand, and the operational control, which is in the hands of professional managers, on the other. This can be described as the principalagent problem. Put simply, the question is: will the managers run the corporation exclusively for the long-term benefit of the shareholders, and what mechanisms can be put in place to ensure this takes place? Most individuals involved in business are basically honest and principled. Gandhi is said to have observed that India's British rulers believed they could set up a system that was so perfect that people would no longer need to be good. Systems of corporate governance are designed to provide a framework for managing companies that embodies best practice rather than relying on individuals' integrity.The most well-known definition of corporate governance originates from the Cadbury Committee, which was set up in the UK in 1991 to raise standards in corporate governance: Corporate governance is the system by which companies are directed and controlled' (Cadbu

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