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What is agency theory and why is it relevant for the business entity? Agency theory posits that corporations act as agents of its shareholders. That is, shareholders invest in corporate ownership and thereby entrust their resources to the management of the directors...
What is the role of securities laws in corporate governance? Federal securities laws are generally concerned with corporate compliance. The primary federal securities laws are the Securities Act of 1933 (33 Act) and the Securities Act of 1934 (34 Act). State law also...
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...