Corporate Goverance Concept Worksheet - Essay Example

The companies have different expectation that can lead to conflicts because of their interests and gains (Minnow & Monk, 2002). The equity issue involves division of company’s ownership. This helps in the companies gain from the increase in profits and wide market. This means that both companies will gain from the investment (Minnow & Monk, 2002). McBride finance services company has an intention to remain in control of the company even after selling majority shares to Beltway investment company.

A clear illustration of this is that the chief executive has influence in the selection of the board of directors. As Beltway gives the company freedom to select the directors, Mc Bride ensures that it influences the selection. The board comprises of the people it can influence to make decisions favoring McBride company. The scenario creates conflict of interest, which was not brought out during negotiations. The conflict of interest will create a hostile working relationship between the two companies.

The reason behind this is the win-lose situation created by the company. Beltway wants a fair selection of the board (Tricker, 2009). Control involves running of the company activities and who is in charge. The control of the company should be in the best way possible. The selection of the board should be on merit not on other hidden agendas. Fair selection and freedom to managers will help in running the company affairs to achieving its objectives and goals to the maximum (Tricker, 2009). Beltway company did not identify Mc Bride’s intention in its issue.

Mc Bride company does not intend to let Beltway know the real, financial position. The company does this through tampering with financial documents. The company also does not comply with Sarbanes-Oxley act of corporate responsibility of financial reporting (Greene, Silverman & Becker, 2003). The company aims at using internal controls to hide