BUS 101 Study GUide worked on

BUS 101 Study GUide worked on - `BUS 101 Study Guide...

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`BUS 101 Study Guide OWNER/INVESTOR ISSUES & SOX 1. Understand business owners as a stakeholder. a. Understand the concept on corporate governance. a.i. State charter shareholders (corporation) board of directors management employees a.ii. Employees- middle management, 1 st level managers, employees a.iii. Owners- top management, CFO, CEO a.iv. NOTE: management hired by board are usually considered owners b. Discuss issues relating to the separation of ownership and control (the agency problem). b.i. Pre-corporate period- owners/managers b.ii. Corporate period- shareholders board of directors managers b.iii. Agency problem- agent acts for principal b.iv. Problems with agency relationship b.iv.1. Agent acts in own best interest b.iv.2. Excessive “perks” b.iv.3. Shirking c. Clarify the role of the board of directors c.i. Changes in board of directors c.i.1. “Outside” directors- non-employed by company c.i.2. “Independent” directors- not employed by company, not doing business with company, no relatives working for company c.i.3. Stronger board committees c.i.4. Diversity c.ii. Establish board committees c.ii.1. Audit c.ii.2. Nominating Compensation d. Understand was to improve the function of the board of directors. Building a better board- define role of board, have explicit financial goals, widen talent pool for directors, encourage constructive criticism e. Know the role of government in protecting owner’s interests. Government regulation to protect owners by providing more complete, transparent information about financial health of publicly traded companies 2. How does the Sarbanes-Oxley Act affect corporate governance. - Limits non-auditing services of auditors. Enhances financial disclosure. CEOs and CFOs certify financials. Protects whistle blowers. Code of ethics disclosure. 3.
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BUS 101 Study GUide worked on - `BUS 101 Study Guide...

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