Roles of BoD directing the affairs of the organization advising disciplining

Roles of bod directing the affairs of the

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Roles of BoD : directing the affairs of the organization & advising, disciplining & compensating managers Enhancing effectiveness of BoD : external directors, diversity of directors’ background, consistent director evaluation, director compensation Pros and cons of outside directors compared to insiders and related outsiders
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Internal Governance Mechanisms (2) Executive Compensation Salary, bonus, and long-term incentives Long-term incentive aligning manager and owner interests (i.e., stock option, stock) Pros and cons of cash compensation Ownership concentration: strong monitoring, coordination Block holders (i.e., institutional investors such as financial institutions mutual funds and pension funds) Pros and cons of institutional investors
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Enron Scandal Enron Scandal in 2001 False accounting statement & manipulation of the stock prices Board independence (external board members), managerial incentives (stock options), ownership concentration??? What would be your suggestion in terms of corporate governance to prevent such agency problems? Consequence: Sarbanes-Oxley Act (2002) to protect investors from possible fraudulent accounting activities by firms
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Martha Stewart Living Omnimedia
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MSO’s Corporate Governance Martha Stewart was CEO, Chairman, and controlling shareholder Board appointment Charlotte Beers: Former chairman of J. Walter Thompson Worldwide; previously chairman and CEO of Ogilvy & Mather and chairman emeritus of Ogilvy & Mather Worldwide Inc.; Under Secretary for Public Diplomacy and Public Affairs for the George W. Bush Administration from 2001 to 2003. Identified as a candidate for the board by Martha Stewart.
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