Theory of corporate governance

Assignment Help Accounting Basics
Reference no: EM13115785 , Length: 2300 words

Part A

An issue that attracts debate in relation to corporate governance is whether there should be a requirement that boards  have a majority of independent directors.

Consider the above statement, then identify and discuss both the arguments for and against the proposal that the majority of members of the board of Directors should a beindependent.

Your discussion must include a response to the following:

- what does the term 'independent director' mean?

- should specific board positions be held by independent directors (eg Chairman). If so, why? If not, why not?

- What is the primary role of a board of directors?

- Is the primary role of a board of directors' best met by having a majority of independent directors?

- is there evidence of a positive correlation between an 'independent board' (ie a board consisting of a majority of independent directors) and corporate performance (ie, is there any evidence that performance is improved where the majority of the board is independent)?

Part B 

There are formal regulatory approaches to corporate governance and voluntary, self-regulation approaches. Give an example of each. Identify and briefly explain both a theory of corporate governance that supports a formal regulatory approach and a theory that supports a voluntary, self -regulation approach.

Reference no: EM13115785

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