Corporate Governance Overview

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What is the main purpose of corporate governance?

To ensure that the company is managed accountably and transparently

According to Schleifer & Vishny (1997), what aspect of corporate governance is emphasized?

How suppliers of finance assure themselves of returns on their investments

Which of the following is NOT an important feature of corporate governance?

Encouraging excessive risk-taking by companies

What relationship does Agency Theory primarily address in corporate governance?

Relationship between business principals and their agents

According to Stewardship Theory, what motivates people to work for others or organizations?

Intrinsic motivation

Which theory focuses on optimizing relations with stakeholders to improve efficiencies in a project or organization?

Stakeholder Theory

How does Resource Dependency Theory view interorganizational relations?

As a means for securing needed resources and enhancing control over resource supply

Which theory refers to political influence in the governance structure of companies?

Political Theory

Study Notes

Corporate Governance

  • The main purpose of corporate governance is to ensure that the interests of stakeholders are protected and that the organization is managed in a responsible and effective manner.

Emphasis on Corporate Governance

  • According to Schleifer & Vishny (1997), the aspect of corporate governance that is emphasized is the relationship between managers and shareholders.

Important Features of Corporate Governance

  • The following are important features of corporate governance, except for the distribution of ownership among employees.

Agency Theory

  • Agency Theory primarily addresses the relationship between principals (shareholders) and agents (managers) in corporate governance, focusing on the potential conflicts of interest that may arise.

Stewardship Theory

  • According to Stewardship Theory, people are motivated to work for others or organizations because they are driven by a sense of responsibility and a desire to contribute to the success of the organization.

Stakeholder Theory

  • Stakeholder Theory focuses on optimizing relations with stakeholders, including customers, suppliers, and employees, to improve efficiencies in a project or organization.

Resource Dependency Theory

  • Resource Dependency Theory views interorganizational relations as a means of acquiring and managing resources, such as financing, technology, and expertise.

Political Theory

  • The theory that refers to political influence in the governance structure of companies is Political Theory.

Explore the key concepts of corporate governance, including the system of rules, practices, and processes that direct and manage a company. Learn about how corporate governance ensures accountability, transparency, and a return on investment for finance providers. This quiz provides insights based on Schleifer & Vishny's work and the OECD guidelines.

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