How a company is governed influences rights and relationships among organisational stakeholders, and ultimately how an organization is managed. Corporate governance might be looked at from a variety of viewpoints: the board of directors, senior management, investors, the media, proxy advisors, regulator and other stakeholders. It focuses on assessing the effectiveness and execution of governance roles and responsibilities. The financial crisis of 2008 and previous corporate governance crises have increased concerns over the role and composition of the Boards of Directors (BOD) of companies. Indeed in April 2011, the report of the US Senate Permanent Subcommittee on Investigations observed that the crisis arose because of high risk lending, regulatory failure, inflated credit ratings, and abuses and conflicts of interest by investment banks. Recent debates have focussed on the effectiveness of governance roles and responsibilities, strengths and blind spots, the implications of behaviours and actions, and developing skills for addressing difficult governance situations and advancing monitoring and strategic goals and risks of and by a board of directors.

 

Commentators have been asking questions whether corporate boards are doing enough to prevent such occurrences; whether the boards have the right balance of skills, experience and expertise to prevent a repeat of these events. Globally there has been a debate on whether board diversity could enhance corporate accountability and performance. Arguments are varied and available evidence are scanty to support any conclusive policy pronouncements on the benefits or otherwise of various aspects of corporate governance mechanisms. However, due to increasing globalisation of corporate operations (both in terms of product and factors) the determination of how the BOD impact on accountability and long term performance of companies has become more relevant. There are opportunities for significant policy options to emerge from high quality research to help policy makers and other stakeholders on the relevance of the board to corporate accountability and performance.

 

Governance is contextual and requires judgement and in this assignment you are expected to grapple with ambiguous situations that do not have simple solutions.

 

You are required to write a 3,000 word ACADEMIC essay that:

1. considers the role of board and board diversity in corporate governance;
2. critically considers the relationship between board diversity and accountability and company performance; and
3. critically examines the role of shareholder activism in corporate governance.

GUIDE

 

• Give a background to the use of boards to enhance corporate governance and define board diversity.
• Highlight the importance of the board of directors and identify the aspects of the role of board of directors in corporate governance that are found in literature.
• Discuss board diversity and accountability of the board and company performance; and then discuss the impact upon corporate governance and company performance.
• Depict the deficiencies within corporate governance systems and provide arguments in support of shareholder activism. Discussion may then consider different aspects of shareholder activism and how they have influenced corporate governance.
• Identify key corporate governance issues in relation to corporate boards, board diversity and shareholder activism and suggest explanations why these issues have arisen, try to present a balanced view. You should draw together the main issues that have arisen and make recommendations on how corporate governance might be improved. You may wish to highlight your recommendations in a separate section or include them with the conclusions.
• Referencing: you should use the Harvard referencing style to cite references in-text and compile the references list.

Please Note: Just as ethics and integrity are important in corporate governance, academic integrity is very important in this module. Avoid plagiarism; make an effort to familiarise yourself with the DMU’s policies on academic integrity and academic practice offences.

 

 

ALLOCATION OF MARKS

 

Total marks available are 100%. The distribution of marks is as follows:

 

	Marks
Structure/ Presentation	10%
Discussion of role of board and board diversity that is adequately supported by appropriate citations (academic references)	25%
Critical and evaluative account of the relationship between board diversity and accountability and company performance that is adequately supported by appropriate citations (academic references)	25%
Critical and evaluative account of the role of shareholder activism in corporate governance that is adequately supported by appropriate citations (academic references)	25%
Conclusions and recommendations	10%
References	5%
Total	100%