What is the Foreign Corrupt Practices Act (FCPA) and how does it affect corporate governance? The Foreign Corrupt Practices Act (FCPA) places limitations on the ability of the corporation to pay incentives or bribes to foreign governments and corporate officials to...

What is the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank)? Dodd-Frank was passed in response to the financial downturn beginning in 2007. While Dodd-Frank imposed extensive controls on banks and other lending institutions, it also prescribed...

What industry organizations place standards on corporate governance? Public securities exchanges have extensive governance requirements for companies listing securities for sale with the exchange. Perhaps the most known US exchanges are the New York Stock Exchange...

What are proxy advisory firms and what is their effect on corporate governance? Recent changes to corporate governance laws allow shareholders the ability to add information to corporate proxies. As a result, proxy advisory firms have assumed an important role in the...

What is the role of ethics within corporate governance? Corporate codes of ethics are internal measures aimed at ensuring fair and honest conduct by members of the corporation. The corporate law objective to promote openness of information is echoed in codes of...

How does shareholder access to information give rise to issues in corporate governance? Shareholders own the corporation and control the election of directors. While this structure should effectively check the decision making and actions of directors, the lack of...

What is the role of directors of the corporation? Corporate governance procedures under state law and the Revised Model Business Corporation Act regulate the actions of boards of directors. The Organization for Economic Cooperation and Development, Principles of...

What is the composition of the board of directors? The size of the board and the process for electing directors are laid out in either the articles of incorporation or the bylaws. There are generally few requirements in these governing documents with regard to who can...

What is the business judgment rule? The business judgment rule is a principle that applies to officers and directors acting within the scope of their positions. Directors of a corporation have a fiduciary duty to act in the best interest of their stockholders. This...

Who are the members of a corporation? The corporation is made up of shareholders, directors, officers, and employees. Shareholders are the owners of the corporation. Directors undertake the high-level management and decision-making for the corporation. Officers (and...