Suppose you decide (as did Steve Jobs and Mark Zuckerberg) to start a company. Y

Question

Suppose you decide (as did Steve Jobs and Mark Zuckerberg) to start a company. Your product is a software platform that integrates a wide range of media devices, including laptop computers, desktop computers, digital video recorders, and cell phones. Your initial market is the student body at your university. Once you have established your company and set up procedures for operating it, you plan to expand to other colleges in the area and eventually to go nationwide. At some point, hopefully sooner rather than later, you plan to go public with an IPO and then to buy a yacht and take off for the South Pacific to indulge in your passion for underwater photography. With these issues in mind, you need to answer for yourself, and potential investors, the following questions.

a.Suppose your company is very successful and you cash out most of your stock and turn the company over to an elected board of directors. Neither you nor any other stockholders own a controlling interest (this is the situation at most public companies). List six potential managerial behaviors that can harm a firm’s value.

b.What is corporate governance? List five corporate governance provisions that are internal to a firm and are under its control.

c.What characteristics of the board of directors usually lead to effective corporate governance?

d.List three provisions in the corporate charter that affect takeovers.

*****No plagiarism please******

Explanation / Answer

Ans.

1. Average execution is remunerated over legitimacy based yield

2. Workers evade conflicts with directors because of a paranoid fear of retaliation

3. Individual plans outweigh the long haul prosperity of the organization

4. Expend an excessive number of advantages

5. Board part's obligations to the association conflict with obligations somewhere else (family, work, business connections and so forth

6. Choices are made especially to profit a companion, or the choices include a contention of loyalties

b) Corporate governance is the system of rules, practices and processes by which a firm is directed and controlled. Corporate governance essentially involves balancing the interests of a company's many stakeholders, such as shareholders, management, customers, suppliers, financiers, government and the community.

1. Rights and fair treatment of investors

2. Interests of different partners

3. Part and obligations of the board

4. Honesty and moral conduct

5. Exposure and straightforwardness

c) Characteristics:

1. Set up clear lines of responsibility among the Board, Chair, CEO, Executive Officers and administration

2. A general culture of respectability in business managing and of regard and consistence with laws and approaches without dread of recrimination is basic

3. Build up quantifiable execution focuses for official officers (counting the CEO), frequently survey and assess their execution against them and attach pay to execution.

4. The Board is in charge of vital authority in setting up the organization's hazard resilience and building up a system and clear accountabilities for overseeing hazard. It ought to frequently survey the ampleness of the frameworks and controls administration sets up to distinguish, evaluate, alleviate and screen hazard and the adequacy of its detailing.

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