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Health & Fitness

Corporate Governance

Like anything else, understanding finance, the stock market, and what they mean, is a complicated process, so it is always important to understand the fundamentals before trying to lean forward. With all of the coverage of the marketplace, quantitative easing, and budget talks, it can sometimes be difficult to make sense of it all.

One of the hottest topics right now, and an area that has been receiving large amounts of media coverage, is the area of corporate governance — but what does that mean? Many people have some idea what profitability, income, and earnings are, but the term corporate governance has a slightly amorphous connotation. With terms like the Board of Directors, Officers, Management Team, and Stakeholders, it can take a dictionary to even get started!

That being said, let’s look at a brief highlight on how corporate structure works. The firm can make the best product, or give top-notch service, but if it is not managed correctly, and in an ethical manner, the firm will most likely only achieve mediocre performance. Former corporate titans such as Enron, Tyco, and WorldCom have been joined by AIG, GM, and Lehman Brothers. Many argue that better corporate governance would have helped these firms survive the crises that ultimately were their undoing.

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Top down:

•Board of Directors
Elected by the shareholders, and ideally, acts as a check & balance to management
•Officers
CEO, CFO, etc., who actually run the firm
•Stakeholders
Usually thought of as stockholders, but this term can be applied to any party with an interest in the performance of the firm.

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I have attached some great links

Happy Reading!

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