Question

Select two alternatives: Only few countries follow what is called the stakeholder model, giving explicit consideration to other stakeholders in particular, rank-and-file employees. It is important to keep in mind that good governance is value enhancing and so, in principle, is something investors in the firm should strive for In many other countries, the central conflict is between what are called 'controlling shareholders' and 'majority shareholders' such as families In principle, the board of directors hires the executive team, sets its compensation, approves major investments and acquisitions, and dismisses executives if necessary. Because good governance is based upon a large number of principals, like those detailed in the Cadbury Commission's findings, one should expect all firms to display similar governance structures.

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Answer 1

Options (B) & (D) are correct. Good governance adds value to a company so ideally, all investors in a firm should try for that. In principle, a board of directors is supposed to hire the executive team, determine its compensation,decide on major investments and acquisitions, and be responsible for dismissing executives, if required.