Large companies are overseen by what's called a board of directors. This is a group of people who have ultimate authority over what happens at the company. A company's CEO will run the organization, but he or she ultimately answers to the board, which can fire the chief executive and hire a new one if they deem it necessary.
Within the board, there might be several sub-committees. One of the most common of these is the audit committee, which has oversight over the routine audits conducted for the company's financial results.
These audits are supposed to be run by outside accountants, independent of the firm's management (remember, the firm's management created the financial statements that are getting audited in the first place).
The audit committee, usually made up of at least three board members (but often more, depending on the overall size of the company), will communicate with the auditors, helping to keep them clear of management influence and helping them maintain their independence. This allows the board to get a clearer picture of the financials and provide a check against what management is reporting. This may seem paranoid, but its considered routine and part of normal corporate governance.
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Finance: What is non-voting stock?4 Views
finance a la shmoop- what is non-voting stock? hmm well it's stock that doesn't
vote. bet you're shocked to hear that. most people need a PhD in finance to [stock wears an "I didn't vote" sticker.
understand that notion. but really that's it in most cases common stock carries
with it the right to vote. and in fact it's the common shareholders who elect
the board of directors. but every now and then a potentially hostile investor
comes along and buys or wants to buy a big chunk of stock in a company. well the
amount might be a block large enough to elect that potentially hostile investor
slate or the group of people that investor wants to place on the board to
represent her evil intentions .when that happens companies will often create a
class of common stock similar in every way to its normal common only with its [stock checklist of privileges listed]
voting rights stripped away .that way the investor can own an economic interest in
the company but not monkey with the board.
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