Analysis of the Centro case: possible consequences for the remuneration of board members

By | April 11, 2014

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In term of the change of the remuneration of the board members, I anticipate that the remuneration level of those who have an accounting or financial background with high financial literacy would be increased for two major reasons: they are required to do more jobs in analyzing the financial reports through ways such as hiring the independent accounting talents to perform some auditing work; in addition, the market demand for those who have an accounting or financial background with high financial literacy would increase as companies are eager to show the public that they are implementing changes the prevent the similar cases. Competition of such talents would certainly drive up the pay.

Such pay increase would increase the cost of management as well as damaging the interests of other directors who do not have the accounting background. And employees and management would be stimulated to learn more financial knowledge through various studies.