According to the Institute of Chartered Accountants, corporate governance “is commonly referred to as a system by which organizations are directed and controlled”. In other words, corporate governance is the plan that deals with the current problems and issues in a company or corporation, solves disputes between the managers, shareholders, board of directors, and other stakeholders, through strict legal regulations. Evidently, it is a system that basically controls, structures, and operates a particular firm, in order for achieving its long and short-term goals and objectives.

The Board of Directors is the highest managerial authority in the structure of any corporation. Their major role is to assure the profit of shareholders and the well-being of the company’s employees. “It is the board’s job to select, evaluate, and approve appropriate compensation for the company’s chief executive officer (CEO), evaluate the attractiveness of and pay dividends, recommend stock splits, oversee share repurchase programs, approve the company’s financial statements, and recommend or strongly discourage acquisitions and mergers” (Purpose, Authority and Responsibility of the Board of Directors). Undoubtedly, it is a keystone of any corporation, as far as the outcomes of the decisions mentioned above, directly affects the stockholders, employees, and customers. However, it is the shareholders that elect the board of directors, in order for them to assist in their personal financial desires, which, of course, significantly influences the work of the board.

Taking into consideration the information provided, we can now clarify certain issues that a common board of directors faces, while working in a corporation. Probably the key issue that a board of directors faces frequently is the problem of evaluating and paying dividends to their stockholders. Depending on the type of a share, the board should decide on how exactly to pay the clients, based on their current financial statement, which also has to be prepared by the board.  The split or merger of stocks is another vital concern of the board of directors, which influences the shareholders’ profit.