- 10 Marks
SCS – Nov 2023 – L3 – Q6a – Professional Practice and Codes of Ethics
Understanding agency costs avoided by NSL and the role of the non-executive director as per Higgs Guidance.
Question
NSL’s current corporate governance structure consists of three executive directors and one non-executive director, with the CEO serving as the chairman of the board. The board, as presently constituted, may have its strengths and weaknesses.
Required:
i) State and explain TWO (2) agency costs that the company would avoid as postulated by Agency Theory of corporate governance that “agency costs do not exist when the owners and the managers are exactly the same individuals.”
(5 marks)
ii) Explain TWO (2) roles that the non-executive director, Daniel Aidoo, ought to play on the board as identified by the document, Higgs Guidance (2003), to strengthen NSL’s board.
(5 marks)
Find Related Questions by Tags, levels, etc.
- Tags: Agency Costs, Corporate Governance, Higgs Guidance, Non-Executive Directors
- Level: Level 3
- Topic: Professional practice and codes of ethics
- Series: NOV 2023
