Nobody downloaded yet

Corporate Governance: Role of non-Executive Directors - Essay Example

Comments (0) Cite this document
Introduction A non-executive director of an organization is not a part of the management of the organization. What distinguishes a non-executive director from an executive director is the fact that he or she is not an employee of the organization neither is related with the organization in any other manner…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER91.6% of users find it useful
Corporate Governance: Role of non-Executive Directors
Read TextPreview

Extract of sample "Corporate Governance: Role of non-Executive Directors"

Download file to see previous pages It is critical to understand that NED is different from independent directors as NED can own shares of the firm whereas independent directors need not to have the shares. It is critical to note however, that the overall independence of NEDs is often based upon two important criteria of exercising independent business judgment and non-subservience to any influence of the management of the organization. (Cray, 1994) One tiered board of directors are unique in the sense that the overall control of managing directors of the firm is in the hands of a different supervisory board whereas in two tier system this is an additional responsibility of the existing board of directors. Over the period of time, the role of NEDs has increased specially in single tiered boards with non-executive directors taking independent view of the overall governance mechanisms within the organization. This paper will review the role of non-executive directors in single tiered boards and how it has evolved over the period of time. Corporate Governance Before discussing the role of non-executive directors and how their role has evolved during the recent past, it is critical to present an analysis of corporate governance. The issue of corporate governance and how companies should be governed started to emerge after the large scale corporate scandals of Enron and WorldCom. The recent failure of financial institutions and resulting economic downturn has further fueled the debate about whether the companies are being managed in their right sprit or not. The losses incurred by shareholders due to practices of managers therefore outlined that corporate governance should be strengthened while at the same time ensuring that companies meet a certain criteria against which their performance is measured.( Gay, 2001) Corporate governance therefore emerged as a system to control and direct firms. It therefore not only defines the relationship of firms with that of the shareholders but with the employees and other stakeholders also. Corporate governance as a mechanism also outlines ways and means through which the conflict of interest between different stakeholders is actually prevented. By setting out clear and vivid boundaries for each of the stakeholders, corporate governance provides a mechanism through which the interests of each stakeholder are monitored and governed. It is also important to note that recent debate has also focused on the overall economic efficiency of implementing corporate governance and whether the implementation of corporate governance codes is just a cost or it could also lead to the benefits for all the stakeholders also. Corporate governance as a mechanism is based upon certain principles which govern as to how the corporations should be governed while the stakes of all the stakeholders are protected. First principle outlines that firms should give right and equitable treatment to shareholders suggesting that organizations should develop mechanism to facilitate the rights of the shareholders and how such rights can be exercised. It also suggests that the interest of other stakeholders such as creditors, debtors, government, employees and society as a whole should also take into consideration when managers manage the firms. (Hall, & Liebman,1998). One of the key and most important principles outlined by the corporate governance is the roles and responsibilities of board of directors. Corporate governa ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Corporate Governance: Role of non-Executive Directors Essay”, n.d.)
Retrieved from
(Corporate Governance: Role of Non-Executive Directors Essay)
“Corporate Governance: Role of Non-Executive Directors Essay”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Corporate Governance: Role of non-Executive Directors

The Role of Corporate Governance Mechanism of Independent Directors

...?The Role of Corporate Governance Mechanism of Independent Directors In this paper the mechanism of independent directors under the guidelines of Corporate Governance will be analyzed to see how effectively it was designed and how well it has been implemented in the real life. The mechanism suggests that the Board of Directors should comprise of an equal numbers of executive and non-executive (independent) directors. Executive directors are responsible for the management of the company’s operations...
9 Pages(2250 words)Essay

Corporate Governance and Non-Executive Directors: A Good Start But Not Enough

...?Corporate Governance and Non-Executive Directors: A Good Start But Not Enough This paper analyses the extent to which corporate governance issues had been resolved as a result of the greater role being played by non-executive directors. In fine, this paper argues that whilst there have been some measures put in place as a result of the assumption of non-executive directors, there still are a plethora of issues and problems that need to be addressed and resolved, including the degree to which directors can be held liable for wrongdoing and the existence of mechanisms to ensure redress for corporate malfeasance and misfeasance. It is only through a wholistic approach in corporate governance that a definitive solution may be reached... ...
12 Pages(3000 words)Essay

Role of Independent Non-Executive Directors

...of "independent", it is necessary to strive for equally high level of training and competence. References Arbouw, J. 2004. The Empty Boardroom, Is this becoming a reality? Company Director, October, pp. 8 – 14. Barratt, R. & Korac-Kakabadse, N. 2002. Developing reflexive corporate leadership: The role of the non-executive director. Corporate Governance. Bradford. Volume 2. Issue #3: pp98-120 Barrow, C. 2001. The Role of Non-Executive Directors in High Tech SMEs. International Journal of Business in Society. Cranfield. Volume 1. Issue #2:...
9 Pages(2250 words)Essay

The Seeking of the Non-Executive Directors (NEDs)

...?The seeking of the Non-executive directors (NEDs) Table of Contents Introduction 3 The role of the non-executive director 3 The key responsibilitiesof non-executive directors 5 Strategic Direction 6 Monitoring Performance 6 Communication 7 Risk 7 Conclusion 7 References 9 Introduction The subject of corporate governance is associated with the jobs and accountabilities of a business organization’s Board of Directors in handling the business and their associations with the organization’s shareholders as well as other...
5 Pages(1250 words)Essay

Explain the duties and responsibilities of the Non-executive Directors (NEDs) in the Corporate Governance process: a) within

...the presence of other executive directors except for an independent director) and this independence is reinforced by the structure of pay (no performance related incentives), relationship (appointed not hired and therefore not an employee subject to the directives of the management). In effect, Non-executive Directors are the regulatory agencies watchdog on the help of UK’s corporate world to ensure that the business practice of companies in UK are in accordance with the highest ethical standard that will guard the public’s trust in them. Bibliography 1. CIMA (nd). The Role of the...
4 Pages(1000 words)Essay

Non-Executive Directors in Corporate Governance

...List of Abbreviations used OECD: Organization for Economic Cooperation and Development 2. HIH: Heath International Holdings 3. ROI: Return On Investment 4. NED: Non Executive Directors 5. CIMA: The Chartered Institute of Management Accountants The Part played by Non-Executive Directors in Corporate Governance: a Critical Evaluation Introduction The role and liability of the board and directors has come forward as a crucial matter in probing the reason of high profile crumples like Enron, Parmalat, One.Tel, WorldCom and HIH. This has produced a lot of...
11 Pages(2750 words)Essay

Corporate governance and the role of executive incentives

...Running Head: assignment Corporate Governance and the Role of Executive Incentives of the of the of the Professor] [Course] Introduction Governance has gained strict implications and meanings when used in corporate parlance. Increased competition and influence of regulatory bodies has made maintenance of order, compliance and value based performance essential for businesses and organizations to function. Corporate governance as such has grown manifold in its research based abilities and controlling the corporate behavior of entities involved. With numerous mechanisms working under the...
10 Pages(2500 words)Essay

Executive vs. Non-executive Pay

...Executive Vs. Non-Executive Pay Executive vs. Non-executive pay In each organization there is executive and non executive pay. Inan organization, executive is group of people given the responsibility of management. They are also known as the managers or directors. Their main role is to direct activities and to ensure company’s goals and objectives are fulfilled. Executive pay is directed in respect of the guidelines laid down by the board of directors while non executive...
1 Pages(250 words)Research Paper

Are non-executive directors capable of fulfilling the role given to them in the UK Corporate Governance Code

...Are Non-Executive Directors Capable Of Fulfilling The Role Given To Them In The UK Corporate Governance Are Non-Executive Directors Capable Of Fulfilling The Role Given To Them In The UK Corporate Governance Code? The definition of non executive directors can be understood by a closer look at their roles and responsibilities in UK companies. Essentially the role of a non executive director is to provide creative contribution to the board of directors of a particular company. Non executive directors should be able to bring an independent judgment on issues that touch on strategy, performance, resource utilization, appointment of persons to key positions and standards of conduct in their respective companies. Due to lack of a legal... they...
5 Pages(1250 words)Essay

Behavioral Finance In Corporate Governance Independent Directors And Non-Executive Chairs, And The Importance Of The Devils Advocate

... the agency problems Once way of offering balance is vetting those to be given authority in organizations Appoint people specifically with power to offer criticism to people in authority. Critique of the article people appointed in organizations to criticize the management but fails to state how the critics would be criticized Advocating for vetting of people may be short lived people can devise ways of beating the vetting process. References Morck, R. Behavioral Finance in Corporate Governance - Independent Directors and Non-Executive Chairs. SSRN Electronic Journal. their loyalty. Ethics of corporate governance Organizations are marred with ethical...
2 Pages(500 words)Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Corporate Governance: Role of non-Executive Directors for FREE!

Contact Us