Corporate Governance Mechanisms

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Please refer to attached file response, which is also presented below. I hope this helps and take care.

RESPONSE:

1. Do you believe that large U.S. firms have been over governed by some corporate governance mechanisms and under governed by others -- provide examples of both situations?

Large US corporations and firms must coordinate a complex web of relationships among sometimes-conflicting constituencies. Corporate governance is concerned with the rules and practices that determine how large corporations are controlled and how they relate to shareholders, creditors, employees, customers, suppliers, and even the communities in which they operate. Internal governance mechanisms are a way to influence a company by using internal structure and procedures (i.e., shareholders, board of directors, management), whereas external governance mechanisms (i.e., regulatory standards, accounting, auditing, laws and regulations, financial sector and markets) are ways to influence the company through regulations and through market control. There are private stakeholders (i.e., accountant, lawyers, investment brokers, etc.). In fact, though, large U.S. firms have been over governed by some corporate governance mechanisms while under governed by others.

Large corporations account for a significant portion of our economic activity. The rules that govern their decision-making are critical to wealth creation and the economic well being of the nation. An efficient governance system places control in the hands of those with the incentive and means to create wealth. And, in the view of many, that means shareholders. So much recent corporate governance activity has aimed at ...