AFM433 Lecture Notes - Lecture 10: Capital Structure, Independent Director, Skill

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM433
• Professor: Mark Arnason

Document Summary

Corporate governance is a system: ceo and management, send periodic updates to directors, transparent reporting to stakeholders, board of directors, provides oversight to management, minimal information flow, no individual accountability to stakeholders. Stakeholders: capital and information to management, weak controls, little influence to directors, community, employees, customers, suppliers, effective interactions between each of the anchors. Importance of governance: trust, stakeholders, ceo and management, board of directors. Stakeholder values: managers" behaviour and discretionary latitude, reduces potential for fraud, prevent significant mistakes in corporate strategy, correct mistakes, potential for honest errors in judgment. International financial stability: better policies for better lives, basis for effective corporate governance framework, equitable treatment of shareholders and key ownership functions, rights of stakeholders, disclosure and transparency, responsibility of the board of directors. Independence of board from management: outside directors, oversight of board vs strategy and development, board oversees what management does. Structure, policies, practices, reporting: private, no independence of owner from managmeent, owner has majority equity interest.