CHAPTER 1
CORPORATE GOVERNANCE
LEARNING OUTCOMES
After completing this chapter, you will be able to do the following:
- Explain corporate governance, describe the objectives and core attributes of an effective corporate governance system, and evaluate whether a company’s corporate governance has those attributes.
- Compare major business forms and describe the conflicts of interest associated with each.
- Explain conflicts that arise in agency relationships, including manager-shareholder conflicts and director-shareholder conflicts.
- Describe responsibilities of the board of directors and explain qualifications and core competencies that an investment analyst should look for in the board of directors.
- Explain effective corporate governance practice as it relates to the board of directors, and evaluate the strengths and weaknesses of a company’s corporate governance practice.
- Describe elements of a company’s statement of corporate governance policies that investment analysts should assess.
- Explain the valuation implications of corporate governance.
1. INTRODUCTION
The modern corporation is a very efficient and effective means of raising capital, obtaining needed resources, and generating products and services. These and other advantages have caused the corporate form of business to become the dominant one in many countries. The corporate form, in contrast to other business forms, frequently ...
