Question

2. Explain if firm management is not also part of the Board of Directors, what problems could occur?

Answer 1

The management of the firm and the board of directors have different tasks to perform but they need to be co-ordinated. The roles and responsibilities of the management are to take the decisions regarding the business and operations of the firm. They also maintain documents and record of the information that they will have to show to the board of directors. The roles and responsibilities of the board of directors includes the approving of the decisions that are taken by the management and supervising that the management is doing its work properly.

If the firm management is not part of board of directors then board of directors will not be able to understand the real problems and solve them. The management understands the problems better and the board of director is better at approval than taking the decisions.