Attention: Due to a bug in Google Chrome, this page may not function correctly. Click here to learn more. 4. Corporate governance: Methods for influencing management's decisions Aa Aa Corporate governance refers to policies and rules, regulations and laws, and activities that (1) influence both management's decisions and its company's operations, and (2) affect the relationships between a business's stakeholders. These stakeholders include the company's executives and managers, shareholders, creditors, curren and former employees, competitors, and local and global communities. In simple terms, corporate governance provisions can take two forms: BEBEe and provide undertaking activities that are beneficial to the firm's stakeholders, and the latter intended to These governing forces are both internal and extemal to the organization, and can either align management's interests with those of their shareholders (a positive outcome) or further entrench the firm's management (a not-so-positive outcome). An entrenched management is one that is be removed, all other things remaining equal , with the former intended to reinforcement for Mehe management for its undesirable decisions or actions. likely to Internal and extermal corporate governance provisions and activities can take many forms, including the use of interlocking board members. Which of the following best describes this practice? O In this situation, a firm's CEO also serves as the chairperson of the board and personally selects all of the members of the firm's board. O In this situation, a board member of one firm also serves as a member of another firm's board or on its management team O This practice requires that all members of a firm's board of directors be elected in each election. If you were designing the composition and acceptable practices for the board of directors of a new corporation, which of the following practices would you suggest be implemented? Check all that apply D Senior managers should keep a lot of cash on hand, rather than investing it in productive assets, because it allows them to spend money on unnecessary expenditures and perquisites. performance and the value of its common shares. managers Il Management's compensation should consist of a cash salary and a bonus that is linked to the firm's The company's charter should include provisions that make it more difficult to replace the frm's existing The board of directors should consist of fewer than ten members