Question 1. How do you think corporate governance system views direction and control of a firm?

Ans: Corporate governance is the system of rules, practices, and processes by which a firm is
directed and controlled. Corporate governance essentially involves, balancing the interests of a
company’s many stakeholders. Corporate governance also encompasses practically every spare of
management, from action plans and internal controls to performance measurement and corporate
disclosure. The shareholders role in governance is to appoint the directors and the auditors and to
satisfy themselves that an appropriate governance stricture is in place.

Question 2. Explain the four pillars of good governance.

Ans: Four pillars of good governance:
1. Accountability: Accountability at every level allows an organization to work efficiently.
If there is no accountability in the company, it may fall prey to abusive directors who
misuse he resources of the company for their own gain.
2. Transparency: Transparency is necessary for any company to work efficiently. The
information should be available in such a manner that it can be easily understood by the
persons involved.
3. Fairness: fairness allows to equitable treatment of the shareholders inside and equitable
treatment to the society as well. Even the employees and the minority shareholders should
be treated fairly.
4. Independence: An effective system of corporate governance must strive to channel the
self-interests of managers, directors, and the advisors upon whom they rely, into alignment
with corporate, shareholder and public interest.

Question 3. When do you think a knowledgeable and experienced director may not be able to
express his/her opinion in board independently?
Ans: A knowledgeable and experiences director may not be able to express his/her opinion
independently because of conflicts of interest between the director and the company itself.
Conflicts of interests can arise between directors’ interest and stakeholders’ interests also.