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Corporate Governance EMBA Class of 2017

Boards of Directors Corporate governance: The processes, policies, and laws that govern an organization (often corporations) to establish accountability and try and eliminate conflicts of interest associated with principle-agent problems Board of directors: A group of individuals, either elected or appointed, that oversees the activities of an organization or corporation.

Board of Directors Agency problem: Exists when the interest of the individuals that act as agents to manage the company, that may not align with the interest of the firm’s stockholders Board insiders (outsiders): Members of the board of directors that are generally employed inside (outside) of the organization CEO duality: Occurs when the chief executive officer is also the chairman of the board of directors

Board of Directors What does a Board do?

Directors the Direct What are some keys to effective boards?

The Interlocking Directorate

Institutional Investors Organizations that invest large sums of money into a broad portfolio of holding Banks Retirement funds Mutual funds Pension funds Sovereign Wealth Funds

Activist Investors How can shareholders affect firm outcomes?