Purchase Solution

Business Policy and Corporate Governance

Not what you're looking for?

Ask Custom Question

a. Explain why corporate governance fails.

b. List some of the "indulgences" other than golden parachutes and poison pills (which are given to managers by the BOD) some managers have given to themselves.

c. What do you think should be a reasonable spread (either a dollar or percentage spread) between the earnings of a firm's CEO and its lowest paid hourly workers and why?

Purchase this Solution

Solution Summary

Corporate Governance is discussed in great detail in this solution.

Solution Preview

a. Corporate governance fails because of several reasons. First, there is a conflict of interest between the management and the shareholders. The management continues to make bad decisions if they feel that these will lead to a higher compensation, a faster promotion, or a better career. There is little alignment of management's interests with that of the shareholders. In most companies, Board members are appointed by and serve until the CEO wishes them to serve. The result is that the Board members approve the decisions of the CEO. The board members are protected from liability by past court decisions and liability insurance.

Corporate governance fails because there is an excessive use of stock options or rewards linked to short-term share prices. The rewards package of management is designed in such a way that the interests of the ...

Purchase this Solution


Free BrainMass Quizzes
Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

Cost Concepts: Analyzing Costs in Managerial Accounting

This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.