Final answer:
In a public corporation, the board of directors reports directly to the owners (shareholders) and is responsible for overseeing the company's governance and operations.
Step-by-step explanation:
In a public corporation, the entity that reports directly to the owners, who are the shareholders, is the board of directors. The board of directors is elected by the shareholders and serves as the first line of corporate governance and oversight for top executives such as the CEO and CFO. Although the board of directors can be influenced by these executives, their primary role is to ensure that the company is operated in the best interests of the shareholders. It is also worth mentioning that the auditing firm hired by the company and outside investors, especially large shareholders, play significant roles in corporate governance.
However, these groups do not report directly to the shareholders as the board of directors does. The case of Lehman Brothers is an example where corporate governance failed to provide accurate financial information to investors, highlighting the importance of a strong and effective board that can hold top executives accountable.