Final answer:
The management of a fiduciary institution generally involves active daily management, the Trust Committee, the Full Board of directors, and any subcommittees established by the Board. External factors such as auditing firms and large investors also play significant roles in corporate governance. However, the effectiveness of governance structures relies on the integrity and competence of individuals and the diligence of external parties.
Step-by-step explanation:
The management of a fiduciary institution typically involves several key elements, which can be inclusive of active daily management, a Trust Committee, the Full Board of directors, and any subcommittees established by the Board.
While each institution may have its specific structures, generally, active daily management refers to senior executives and managers who handle the day-to-day operations of the firm.
The Trust Committee is responsible for making decisions that align with the best interest of the clients they serve. The Full Board of directors, elected by the shareholders, plays a crucial role in corporate governance and oversight for top executives of the company. The board may also create subcommittees to address particular areas of concern, such as audit or compensation matters.
In addition to these internal entities, there are external institutions that play a role in corporate governance. One such external entity is the auditing firm that a company hires to review the company's financial records and provide assurance that everything is in order. Large outside investors, such as those who manage substantial mutual funds or pension funds, also influence corporate governance through their investment decisions and sometimes, advocacy for changes in corporate practices.
However, it's important to recognize instances such as the failure of corporate governance at Lehman Brothers, where these oversight mechanisms did not prevent significant issues. Thus, while the structure of management and oversight is vital, its effectiveness depends on the integrity and competence of the individuals involved and the vigilance of external parties.