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Finance & Accounting
Pages 4 (1004 words)
Question No 1: Should the CEO chair the board? Briefly discuss this from the perspectives of the stakeholder and agency approaches to corporate governance, highlighting the advantages and disadvantages of each approach as a way of analysing this issue Answer Chief Executive Officer (CEO) chairing the board means a possibility of scandals cannot be avoided.
It is consisted of rules, which govern the relationships between stakeholders, shareholders and management (Ching et al, 2006). In the 1980s and early 1990s, some huge corporate scandals shocked the entire commercial world. Majority of the investors had lost their confidence over management of their investments; the entire commercial world was filled with distrust. To control this damage, different approaches are used such as corporate governance. In UK, Combined Codes consisting of various reports has been developed-Cadbury, Higgs, Smith, Greenbury. These reports discuss how a Board of Directors should operate; what role non-executive directors can play; how the external auditor should be strengthened and so on. Stakeholder approach and corporate governance Stakeholder theory is defined as any group or individual who can affect or is affected by the achievement of the organization’s objectives (Abdullah and valentine, 2009).Stakeholder approach defines an organisation being a member and citizen of society, enjoys a protection, benefits and so on. On the basis of this concept, organisations being a member of the society are remain accountable to all the stakeholders such as environmental groups, customers, governments, regulatory authorities, indigenous population and so on. ...
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