UGC NET COMMERCE December 2018 Q70
0. Corporations are controlled and directed by which one of the following?
- Option : B
- Explanation : Corporate governance is a set of processes, customs, policies, laws, and institutions that affect the way a corporation is directed, administered or controlled. Corporate governance mechanisms consist of internal and external systems and procedures used to ensure that the agent (the management of the corporation) runs the firm for the benefit of one or more principals (shareholders and other stakeholders). An important theme of corporate governance is to ensure the accountability of a corporation’s management through mechanisms designed to reduce the agency problem between managers and shareholders. In the Anglo-American model of corporate governance, shareholder wealth maximization generally holds primacy as the firm’s goal. Thus, governance devices attempt to align or ensure that managerial behaviour and actions pursue this goal. Governance control mechanisms work through a broad array of layered and overlapping actions such as monitoring by the boards of directors, compensation systems, ownership structure, takeovers, and government regulations.
