db question 87

Response to the following with 250 words APA style

As Hopkins explains, corporate governance can be effective at overseeing an organization from a higher perspective with real stakes that influence them to act in the best interest of the company. Corporate governance difference from non public hierarchy in the sense that CEOs of non public companies may be individual and have complete control over a companies decision making. Sometimes this can be benificial as you may not want several people steering a boat when one person knows exactly where they are going. Though on the other side of that, a individual CEO will not likely be an expert in multiple fields and may also not take the advice from their hired experts.

With a corporate structure where all stake holders have at least a monetary stake by owning shares of the company, if not more stakes such as a love for the company, its purpose and its people, the shareholders will be many and may come from a variety of backgrounds with varying expertise. With that, individual shareholders bring parts of a whole in regards to assessing risk. As there is risk in every aspect of a business, including marketing, loss prevention, business developement and all others. With each individual set to grow their share sizes they also want to ensure their share sizes don’t shrink.

One example can be taken from the recent issues within the many companies that Elon Musk has been a part of. His interactions on social media and an interview he did on the Joe Rogan podcast concerned shareholders. There was talk of him stepping down from one of his companies as the acting CEO. Whether or not you agree with this decision, it provides and interesting example of how the Corporate Governance system can act for the interests of the company at large over the interest of the individual owner.

Hopkins, P. (2017). Fundamentals of Risk Management: Understanding, Evaluating, and Implementing effective risk management. 4th Edition. London, England: Koran Page Limited

 

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