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    Introduction To Corporate Governance

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    Jhianne Estacoja
    The document discusses corporate governance. It defines corporate governance as a system of rules, practices, and processes by which businesses are directed and controlled. The purpose of corporate governance is to enhance shareholder value and protect stakeholder interests through improved corporate performance and accountability. A well-governed organization implements effective risk management and internal control systems. The key parties involved in corporate governance are the board of directors, management, shareholders, and other stakeholders.

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    Introduction To Corporate Governance

    Uploaded by

    Jhianne Estacoja
    21 views11 pages
    The document discusses corporate governance. It defines corporate governance as a system of rules, practices, and processes by which businesses are directed and controlled. The purpose of corporate governance is to enhance shareholder value and protect stakeholder interests through improved corporate performance and accountability. A well-governed organization implements effective risk management and internal control systems. The key parties involved in corporate governance are the board of directors, management, shareholders, and other stakeholders.

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    The document discusses corporate governance. It defines corporate governance as a system of rules, practices, and processes by which businesses are directed and controlled. The purpose of corporate governance is to enhance shareholder value and protect stakeholder interests through improved corporate performance and accountability. A well-governed organization implements effective risk management and internal control systems. The key parties involved in corporate governance are the board of directors, management, shareholders, and other stakeholders.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    21 views11 pages

    Introduction To Corporate Governance

    Uploaded by

    Jhianne Estacoja
    The document discusses corporate governance. It defines corporate governance as a system of rules, practices, and processes by which businesses are directed and controlled. The purpose of corporate governance is to enhance shareholder value and protect stakeholder interests through improved corporate performance and accountability. A well-governed organization implements effective risk management and internal control systems. The key parties involved in corporate governance are the board of directors, management, shareholders, and other stakeholders.

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    Introduction to Corporate

    Governance
    MGT 103
    What is Corporate Governance?

    • a system of rules
    • practices by which businesses are directed and
    • processes controlled.

    • a SYSTEM OF STEWARDSHIP AND CONTROL to guide


    organizations in fulfilling their long-term economic,
    moral, legal, and social obligations toward their
    stakeholders.
    Purpose of Corporate Governance

    In simpler terms, the purpose of the corporate governance is to


    enhance shareholders’ value and protect the interests of other
    stakeholders by improving the corporate performance and
    accountability.
    The their
    Requires
    needsfair
    of
    enforcement
    stakeholders
    legal
    are
    aredone
    frameworks in a
    served
    Rule of Law Transparent Responsive
    manner that
    within
    that are a
    follows rules
    reasonable
    enforced
    and
    impartially.
    timeframe.
    regulations.
    institution
    results that
    members feel is
    accountable
    meet the
    that they
    Effective and to
    needs
    havethose
    aof who
    the
    stake
    Inclusiveness Accountability
    Efficient company
    will be
    in it and do
    while
    affected
    making
    not feel by
    the
    its decisions
    best use
    excluded.
    of
    or available
    actions.
    resources.
    What is a Well-governed Organization?

    Internal Control
    Risk Management internal events
    Governance external events

    A well-governed organization is one which implements


    effective risk management and internal control systems.
    ACCOUNTABILITY
    TRANSPARENCY AND FULL DISCLOSURE
    Is the board taking responsibility?
    Is the board telling what is going on?

    GOOD AND EFFECTIVE


    GOVERNANCE

    CORPORATE CONTROL
    Is the board doing the right thing?

    Principles of Effective Corporate


    Governance
    Illustrative Application of Principles:
    • Structure the BOD to add value.
    (a) BOD should have independent directors.
    (b) Roles of Chairperson and CEO should not be exercised by the same person

    • Promote ethical and responsible decision-


    making.
    (a) Establish a code of conduct as a guide.

    • Safeguard the integrity in financial reporting.


    (a) Establish an audit committee
    (b) Require to state in writing that the company’s financial reports present a true and fair view,
    in all material respects, of the company’s financial condition and operational results and are
    in accordance with relevant accounting standards.
    PARTIES INVOLVED IN CORPORATE
    GOVERNANCE 2
    The essence of any system of good corporate governance is
    to allow the board and management
    the freedom to drive their organization forward and
    to exercise that freedom within a framework of effective accountability.
    Stockholder Theory vs. Stakeholder Theory

    STOCKHOLDER THEORY
    STAKEHOLDER THEORY
    suggests that the corporation
    states that the corporation exists
    exists for the benefit of the
    not only for the benefit of the
    shareholders or stockholders.
    stockholders but also for the
    THEREFORE, corporate managers benefit of other stakeholders.
    have the duty to maximize returns THEREFORE, while corporate
    to the benefit of the stockholders. managers have the duty to
    maximize shareholders’ returns,
    they also have a duty to the
    society as a whole.
    Agency Problem

    exists when the “agents” of the corporation use their


    authority for their own benefit and not for the benefit of the “principal”.

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