Final answer:
Corporate governance structures are indeed expected to uphold high ethical standards, including transparency and accountability, which is true. The board of directors, auditing firms, and outside investors form key components in ensuring these standards are met. The Lehman Brothers case exemplifies the importance of robust corporate governance.
Step-by-step explanation:
It is indeed true that corporate governance structures are expected to maintain high levels of ethics and integrity, as evidenced by the transparency, accountability, and honesty of their board members' actions. Corporate governance involves various institutions responsible for overseeing the operations and ensuring the accountability of top executives within a company. The board of directors, primarily elected by the shareholders, acts as the first line of defense in upholding these values. They are tasked with ensuring ethical leadership and strategic guidance.
In addition to the board, auditing firms are engaged to review the company's financial records and validate their accuracy. This external review serves as a check on the company's financial reporting processes. Meanwhile, outside investors, particularly substantial shareholders such as mutual funds and pension funds, also play a crucial role in corporate governance by exerting influence and demanding accountability.
However, as seen in the case of Lehman Brothers, the breakdown in corporate governance can lead to the failure to provide accurate information to investors, thus highlighting the significance of effective governance structures. When corporate governance falls short, the consequences can be dire, leading to loss of investor confidence and financial turmoil.