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Board of Director's Duties/ Sarbanes-Oxley Act

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300 words each question with references

1. What are the responsibilities of the board of directors? Please provide an example of a board of directors that did not meet its responsibilities.

2. Explain the Sarbanes-Oxley Act and its impact on corporate governance. How has it
Changed the way we do business in the United States? Please include an example to support your viewpoint.

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Solution Summary

This detailed solution discusses the responsibilities of the board of directors and provides an example of a board of directors that did not meet its responsibilities. It also explains the Sarbanes-Oxley Act and its impact on corporate governance and discusses how has it changed the way we do business in the United States. APA formatted references are included.

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1. What are the responsibilities of the board of directors? Please provide an example of a board of directors that did not meet its responsibilities.

It is the responsibility of the board of directors to "protect shareholders' assets and ensure they receive a decent return on their investment" (Kennon, 2013). In public companies it is the highest governing authority in the hierarchy of the management structure. The board of directors is responsible for selecting, evaluating, and approving the compensation of the company's top management, in particular, the chief executive officer. It also oversees the company's stock activity in terms of determining when to pay stock dividends to shareholders, when to recommend stock splits, and overseeing any share repurchasing programs. The board of directors has the obligation to approve a company's financial statements. It also has the ability to either support or discourage potential acquisitions and mergers.

Within the board of directors, various committees operate, based upon the individuals' talents and interests. There is an audit committee that ensures the company's financial statements and reports are accurate. This committee is also responsible for interviewing, selecting, and hiring an outside auditing firm. The compensation committee determines base compensation, "stock option awards, and incentive bonuses for the company's executives, including the CEO. The nominating and governance committee is responsible for selecting qualified individuals to serve on the board, determine performance standards for the company, and manage the evaluation process of the board and the ...

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