Posted: February 28th, 2017

list the requirements we suggest that additional governance requirements that can be imposed on boards is that listed companies should have a majority of independent directors.

Step 3 The actions of Cendant management with respect to its obligations to its shareholders are illegal as well as unethical. The laws required that Cendant management should report the correct financial situation of the company in its financial statements. Instead, Cendant management chose to report inflated revenues and earnings. From the deontological ethical perspective Cendant management has the duty to report correct information to its shareholders. Instead, Cendant reported misleading information in its financial statements. Cendant did not meet its ethical obligations to the shareholders of Cendant. The revenues reported by Cendant were incorrect and led to an artificial increase in the share prices of Cendant. The net profits of Cendant satisfied the expectation of Wall Street but failed in its legal and ethical obligations to its shareholders. The shareholders were financially hit when the prices of Cendant suddenly collapsed. The shareholders had trusted the management of Cendant but the management had failed them.

Step 4 From the NYSE listing requirements we suggest that additional governance requirements that can be imposed on boards is that listed companies should have a majority of independent directors. The board must affirmatively determine that the director has no material relationship with the listed company. Further no director who is a former employee, auditor, part of interlocking directorate, or family member of the listed company can be independent until five years after the employment has ended. From the Sarbanes Oxley act, additional governance requirements are that Cendant should have each member of the audit committee to be an independent member of the board of directors. This means that the director does not receive any fees from the company other than those for serving on the board. At least one audit committee member must be designated as a financial expert.

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