Corporate Governance

Corporate Governance

Question1: "Corporate Governance"

Internal Governance Mechanisms

The three internal governance mechanisms are ownership concentration, board of directors and executive compensation. All these internal governance mechanisms provide a yardstick to ensure that the top executives of any company do not get engaged in any questionable activity. The basic essence of corporate governance is to ensure that the interests of managerial agents align with the interests owners of the companies. The ownership concentration must be discouraged because it might lack the promotion of merit. For instance, the son of the owner of the company might not be capable of running the company; therefore, ...