Presentation Chapter 10

Presentation Chapter 10 - Stakeholders' Roles and Chapter X...

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Stakeholders’ Roles and Responsibilities Chapter X
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Corporations’ Role in Society 2 Shareholders Creditors Customers Suppliers G overnm ent E m p l o y e s I n t r L a C i R d u g h q Cash S v c k P b T ax es od s an erv ices 1. Oversight Function 2. Managerial Function 3. Compliance Function 4. Internal Audit Function 5. Legal/Financial Advisory Function 6. External Audit Function 7. Monitoring Function ra te rn F tio
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Chapter Objectives: • Discuss shareholder responsibilities in monitoring the effectiveness and validity of corporate governance. • Provide insight for strengthening shareholder rights. • Discuss the role institutional investors play in ensuring effective and responsible corporate governance. • Provide methods employees can use to participate in the monitoring of corporate governance. • Examine activities by investor activists to strengthen corporate governance reforms. VIDEO (VIDEO)
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Key Terms Blockholding Employee class actions Free-rider problem Institutional shareholder Intercorporate networks Property rights Security class actions Shareholder democracy
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Shareholders Shareholders and other stakeholders, including employees, customers, creditors, suppliers, and society, by being attentive and engaged, play an important role in corporate governance. Recent corporate governance reforms have raised investor expectations for corporate governance, and any attempt to relax or roll back these reforms would be disappointing to investors and adversely affect their confidence in public financial reports and the capital markets. The two biggest corporate bankruptcies in U.S. history, Enron and WorldCom, and the failures of other high-profile companies primarily caused by fraud, which cost investors and pensioners more than $500 billion, made investors take notice and demand corporate accountability.
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Shareholder monitoring The effectiveness of the monitoring and control function by investors is determined based on the interrelation factors of: (1) Property rights established by law or contractual agreement that define the relations between
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This note was uploaded on 03/08/2012 for the course ACCT 7050 taught by Professor Razai during the Fall '11 term at U. Memphis.

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Presentation Chapter 10 - Stakeholders' Roles and Chapter X...

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