Question

Effective corporate governance is essential in large corporations because corporate ownership (by shareholders) is separated from corporate control (by officers and managers). In order to improve corporate governance, most large corporations have eliminated the use of outside directors.A. TrueB. False

Answer 1

B. False

Step-by-step explanation:

Corporate governance is the set of rules and regulation which is a guide to how a business is being controlled and operated. it spells out the right and acceptable processes and actions that are required of the corporation's operators at any point in time. the directors have the responsibility of enforcing it.

Corporate governance is reflected in the way the entity deals with all its stakeholders and how the operators deals with the entity. It is used to rate the wellness of an entity by outside world.

The large corporations have not eliminated the use of outside directors, instead they have instituted a very strong and enduring, corporate governance .

Answer 2

False

Step-by-step explanation:

Outside directors are members of the board of directors that are not employees of the corporation. While an inside director is a member of the board that is also employed by the corporation, e.g. CEO.

Corporations are separate entities form their stockholders, that is why limited liability applies to them. The board of directors doesn't have to include stockholders or employees, they usually do, but it is not required by law. Outside directors should very experienced and capable individuals that possess certain expertise that can help the corporation. Also, the board should control and supervise upper management, but if only inside directors were admitted into it, then who would control them?