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21 Cards in this Set
- Front
- Back
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Accounting Reform and Investor Protection Act of 2002
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also known as the Sarbanes-Oxley Act (SOX) signed into law on July 30, 2002, provide better protection for investors in public companies by improving the financial reporting of companies
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agency problems
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developed when the interests of the shareholders were not aligned with the interests of the manager, and the manager began to pursue self-interest instead of the owners' best interest
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audit committee
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responsible for assessing the adequacy of internal control systems and the integrity of financial statements
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backdating
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the recipient is given the option of buying stock at yesterday's price
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board of directors
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govern and oversee the management of the business
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bullet dodging
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the delaying of a stock option grant until right after bad news
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business judgment rule
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holds that courts should not challenge board members who act in good faith, making informed decisions that reflect the company's best interests instead of their own self-interest
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charter
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issued by the state giving the corporation the right to exist and stipulating the basic terms of its existence
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classified boards
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are boards that elect their members in staggered terms
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clawback provisions
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a compenstation recovery mechanism that enable a company to recoup compensation funds, typically in the event of a financial restatement or executive's misbehavior
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compensation committee
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responsible for evaluating executive performance and recommending terms and conditions of employment
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corporate gadflies
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activist shareholders
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corporate governace
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refers to the method by which a firm is being governed, directed, administered, or controlled and to the goals for which it is being goverened
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golden parachute
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is a contact in which a corporation agrees to make payments to key officers in the event of a change in teh control of the corporation
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nominating committee
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composed of outside directors has the responsibilites of ensuring that competent objective board members are selected
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proxy process
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the method by which the shareholders elect boards of directors
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risk arbitrage
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buying and selling of companies that appear on the verge of being taken over by other firms
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spring loading
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the granting oa a stock option at todays price but with the inside knowledge that something good is about to happen that will improve the stock's value
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Legitimacy
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A condition wherein there is a congruence between an organization’s activities and society’s expectations.
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Legitimation
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A dynamic process by which a business seeks to perpetuate its acceptance.
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Stock Options
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Allows the recipient to purchase stock in the future at the price it is today
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