Corporate Finance ------ Analytical report - Essay Example

Let's begin by taking a closer look at the board of governors and what its members do. Together, management and the board of governors have the ultimate goal of maximizing shareholder value. In theory, management looks after the day-to-day operations, and the board ensures that shareholders are adequately represented. But the reality is that many boards are made up of management. The company Adobe Systems Inc., has a good balance between internal and external board members. Other good signs within Adobe Systems are the separation of CEO and chairman roles and an assortment of professional expertise of the board from accountant, attorney and executives.

It's boards comprised of the current CEO (who is chairman), the CFO and the COO, along with the retired CEO, etc. This does not necessarily signal that the company is a bad investment, but, as a shareholder, it should question whether or not such a corporate structure is in shareholder best interests. The interaction between Financial Markets and Corporate Governance Corporate governance is merely one feature of the superior framework of macroeconomic policies, global capital, products and labour markets, competition, cultural norms, ethics, tax policy and diverse state regulatory systems.

The expansion of global capital markets has shaped the potential for superior access to a bigger investor pool. However, the prime attraction of long-term patient capital, if it is domestic or international, the ability to offer corporate governance systems that are clearly expressed within regulatory and legal frameworks that support contractual and ownership rights. The importance of global capital markets and the governance debate continues to a purely property based regime with private property by which resources are used efficiently in our society.

Global Financial markets focuses on the need to protect those property rights under vastly differing legal and political regimes, correlating shareholder protection and developed external capital markets. Capital markets are key to economic development. Economies, particularly in those nation states that are emerging or transitional, need foreign capital to make the investments necessary to generate wealth. Developed market economies also require additional capital to meet product and other market changes, and to ensure that they are globally competitive.

Transparency of Corporate Governance Norms Provide Market InformationAccounting principles differ from country to country, with differences often reflecting varying business practices, reporting practices and disclosure preferences. For corporate governance to be effective, official regulation of public disclosure will produce company information that is accurate, complete and timely. Interestingly and transparency of corporate governance norms are widely accepted capital market requirement. Disclosure and transparency requirements allow shareholders to monitor the use of their equity capital, enhancing board accountability mechanisms.

Institutional investors such as pension funds are increasingly likely to use these transparency guarantees