6.2 Corporate Governance

• Corporate governance is the system by which companies are directed and controlled
• Good corporate governance ensures vague roles and lack of accountability

  False
• What is one feature of good corporate governance regarding transparency?

  Open and honest communication
• Good corporate governance ensures the equitable treatment of all stakeholders
• Legal compliance is a key feature of good corporate governance
• Order the key elements of corporate governance according to their primary focus:

  1️⃣ Board Structure

  2️⃣ Audit Committee

  3️⃣ Stakeholder Engagement

  4️⃣ Ethical Culture
• Match the key element of corporate governance with its purpose:

  Board Structure ↔️ Oversee company direction

  Audit Committee ↔️ Financial oversight

  Stakeholder Engagement ↔️ Foster relationships

  Ethical Culture ↔️ Promote responsible behavior
• Poor corporate governance includes balanced stakeholder interests and adherence to laws

  False
• The audit committee is responsible for overseeing financial reporting and internal controls
• What is the purpose of the audit committee in corporate governance?

  Financial oversight
• What are the key features of stakeholder engagement in corporate governance?

  Regular communication, feedback, disclosure
• An ethical culture in corporate governance includes a code of ethics
• What are the key elements of corporate governance?

  Board Structure, Audit Committee, Stakeholder Engagement, Ethical Culture
• The Board Structure ensures independent directors, clear roles, and specialized committees
• Accountability, transparency, fairness, and legal compliance are the core objectives of corporate governance.
• Match the corporate governance element with its purpose:

  Board Structure ↔️ Oversee company direction

  Audit Committee ↔️ Financial oversight

  Stakeholder Engagement ↔️ Foster relationships

  Ethical Culture ↔️ Promote responsible behavior
• What is the primary responsibility of the Board of Directors in corporate governance?

  Oversee company strategy
• The CEO is responsible for managing day-to-day operations and executing strategic plans
• Effective corporate governance mechanisms improve financial performance and stakeholder relationships.
• What is the purpose of corporate governance frameworks?

  Ensure accountability and legal compliance
• The OECD Principles emphasize the rights of shareholders
• Corporate governance frameworks guide companies in implementing effective governance practices.
• Match the feature with its description in corporate governance:

  Accountability ↔️ Clear reporting lines

  Transparency ↔️ Open and honest communication

  Fairness ↔️ Equitable treatment of all stakeholders

  Legal Compliance ↔️ Adherence to all applicable laws
• What is the primary purpose of the Audit Committee in corporate governance?

  Financial oversight
• Arrange the following corporate governance roles in order of their primary focus:

  1️⃣ Board of Directors

  2️⃣ CEO

  3️⃣ Audit Committee

  4️⃣ Shareholders
• What is the primary role of the Board of Directors?

  Oversee company strategy
• Corporate governance mechanisms ensure companies are managed effectively and ethically
• The Audit Committee is responsible for overseeing company strategy.

  False
• Steps to ensure effective corporate governance

  1️⃣ Establish a Board of Directors

  2️⃣ Implement internal controls

  3️⃣ Ensure shareholder rights

  4️⃣ Conduct regular audits
• Match the corporate governance framework with its key aspect:

  OECD Principles ↔️ Rights of shareholders

  Sarbanes-Oxley Act ↔️ CEO/CFO certification

  UK Corporate Governance Code ↔️ Board role/composition
• What is the benefit of Executive Compensation Plans?

  Aligns executive incentives
• Effective corporate governance contributes to accountability, transparency, fairness, and legal compliance
• Shareholder Rights enable participation in decision-making.