What is corporate governance?

Corporate
Governance
Running Head: Corporate Governance
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Corporate Governance 1
Executive summary
Corporations are an artificial entity where directors and executives play an important role
in a corporate agent. In every company, these agents take decisions on behalf of corporate and
determine the processes and policies, therefore the board structure must be strong. Here this is
necessary to state that the board is not a person itself but these are directors who frame the same.
A diverse board system is a necessity of today’s date and the report has developed in the similar
issue.
The diversity issue in National Australia bank has been discussed firstly with the help of
statements made by its chairperson. The chairperson of the company believes in shareholder
theory of corporate governance. Further possible advantages and disadvantages of board
diversity have been discussed where pros includes better brand image, better and quick decision-
making and delayed decision, trust issues, communication difficulty can be consider as cons.
Some recommendations have also been outlined and lastly a conclusion summarizing report has
mentioned.

Corporate Governance 2
Contents
Executive summary.........................................................................................................................1
Introduction......................................................................................................................................2
National Australia Bank and opposition for diversity.....................................................................2
Corporate governance theories and diversity..................................................................................3
Advantages of board diversity.........................................................................................................4
Disadvantages of board diversity.....................................................................................................5
Recommendations and impact.........................................................................................................7
Conclusion.......................................................................................................................................7
References........................................................................................................................................8

Corporate Governance 3
Introduction
A company has a range of stakeholders that affect its business as well as also gets
affected by it. In such a situation, it is advisable to have a director on the board eligible to
consider the interest of different types of stakeholders.
Board diversity is an emerging issue of corporate governance that refers to having an
optimal mix of expertise, skills, and experience at the board to ensure the ability of the same to
guide strategies of the company. Diversity can be ensured at various grounds such as gender,
ethnicity, age, independence and so on. Diversity seems important to ensure better decision
making as people from different backgrounds and having different attributes can give a range of
advice. The report presented hereby is solely developed on the topic of board diversity where the
main objective is to check the pros and cons of having the same. The objective shall attain with
the help of a company’s example where the issue of diversity has debated and the report shall be
bifurcate among relevant headings.
National Australia Bank and opposition for diversity
The company selected for the discussion hereby is National Australia Bank, which is one
of the four largest financial institutions of Australia. The company believes in having a good mix
of skills at the board since ever but recently some opposition to increasing the board diversity has
been seen that certainly affected overall diversity somewhere. At present, the company does have
five male and three female members at its board that represents gender diversity
(capital.nab.com.au, 2019). The opposition is very recent that has been made by its newly
appointed chairperson Philip Chronicon. Recently he has been in a conversation with John