In: Finance
Corporate management and the Board of Directors fulfil a vital role to ensure good corporate governance within a company. Which of the reasons, listed below, has been a major contributing factor to corporate governance scandals?
Question 23 options:
Changes to government regulations regarding public reporting and disclosure |
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Unclear separation of ownership and management |
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Maximizing current share holder value tends to focus on the value near term |
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Shareholders have dumped the company's stock |
Option, Maximizing current share holder value tends to focus on the value near term
Reason: Managerial incentive and the board reputation based on the maximization of value to the shareholders has led to increased focus on short term profits at the expense of long term benefits.