Scribd
Upload
19 views20 pages

Corporate Governance

Corporate governance is the process and structure used to direct and manage a company's operations towards enhancing business prosperity and accountability. It aims to realize long-term shareholder value while considering other stakeholders' interests. Good corporate governance leads to better access to financing, lower capital costs, improved performance, higher valuation, and reduced risk of crises. It establishes relationships and effective management among shareholders, managers, directors, employees and other parties. The key pillars of corporate governance are transparency, accountability, responsibility and fairness.

Uploaded by

Krizha Watanabe
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
19 views20 pages

Corporate Governance

Corporate governance is the process and structure used to direct and manage a company's operations towards enhancing business prosperity and accountability. It aims to realize long-term shareholder value while considering other stakeholders' interests. Good corporate governance leads to better access to financing, lower capital costs, improved performance, higher valuation, and reduced risk of crises. It establishes relationships and effective management among shareholders, managers, directors, employees and other parties. The key pillars of corporate governance are transparency, accountability, responsibility and fairness.

Uploaded by

Krizha Watanabe
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 20

CORPORATE GOVERNANCE

Corporate Governance is the process and structure used to


direct and manage the business and affairs of the company
towards enhancing business prosperity and corporate
accountability with the ultimate objective of realizing long-
term shareholder value, and taking into account the interest of
other stakeholders.
“Good governance is not simply about corporate
excellence. It is the key to economic and social
transformation. The corporation of today are no
longer sheer economic entities. These are the
engines of economic and social transformation.”

- Dr Madhav Mehra, President of World Council For


Corporate
Governance
▶ Better access to external finance
▶ Lower costs of capital – interest rates on loans
▶
Improved company performance – sustainability
▶
Higher firm valuation and share performance
▶ Reduced risk of corporate crisis and scandals
If a country does not have a reputation for strong corporate
governance practices, capital will flow elsewhere. If investors are
not confident with the level of disclosure, capital will flow
elsewhere. If a country opts for tax accounting and reporting
standards, capital will flow elsewhere. All enterprises in that
country – regardless of how steadfast a particular company’s
practices may be – suffer the consequences.
▶ Relationships among various participants in determining the
direction and performance of a corporation.
▶ Effective management of relationships among
– Shareholders
– Managers
– Board of directors
– employees
– Customers
– Creditors
– Suppliers
– community
Cor porat
Governance
e

Responsibility
Transparency
A ccount a bi l ity

Fair ness
Fundamental Pillars of Corporate
Governance
Accountability
Clarifying governance roles & responsibilities, and supporting
voluntary efforts to ensure the alignment of managerial and
shareholder interests and monitoring by the board of directors
capable of objectivity and sound judgment.

Transparency
Requiringtimely disclosure of adequate information
concerning corporate financial performance.
Responsibility
Ensuring that corporations comply with relevant laws and regulations
that reflect the society’s values

Fairness

Ensuring the protection of shareholders’ rights and


the enforceability of contracts with
service/resource providers
▶ Sustainable development of all stake holders- to
ensure growth of all individuals associated with or effected by the
enterprise on sustainable basis.

▶ Effective management and distribution of wealth –


to ensue that enterprise creates maximum wealth and judiciously
uses the wealth so created for providing maximum benefits to all
stake holders and enhancing its wealth creation capabilities to
maintain sustainability.
➢Discharge of social responsibility- to ensure
enterprise is acceptable that to the society in
functioning. which it is

➢Application of best management practices- to ensure


excellence in functioning of enterprise and optimum creation of
wealth on sustainable basis.

➢Compliance of law in letter & spirit- to ensure value


enhancement for all stakeholders guaranteed by the law for
maintaining socio-economic balance.
▪ International Corporate Governance Network founded by
institutional investors in Europe and North America
▪ Global Corporate Governance Forum founded by
OECD and World Bank
▪ Commonwealth Association for Corporate Governance
founded by Commonwealth Heads of Government
The Organisation for Economic Cooperation and Development
started operations in 1961to convene governments of
countries focused on democracy and the
market economy to support sustainable economic
growth, boost employment, raise living standards,
maintain financial stability, assist in enhancing economic
development, boost growth in world trade, share expertise and
exchange views.
Endorsement of OECD Principles of Corporate Governance by
OECD Ministers as an international benchmark for policy makers,
investors, corporations and other stakeholders worldwide.

Revised Principles of Corporate Governance.

OECD Steering Group on Corporate Governance issued the


Methodology for Assessing Implementation of OECD Principles of
Corporate Governance.
ROSCs summarize the extent to which countries observe certain
internationally recognized standards and codes. The IMF has
recognized 12 areas and associated standards as useful for the
operational work of the Fund and the World Bank. These comprise
accounting; auditing; anti-money laundering and countering the
financing of terrorism; banking supervision; corporate governance;
data dissemination; fiscal transparency; insolvency and creditor
rights; insurance supervision; monetary and financial policy
transparency; payments systems; and securities regulation.
CORPORATE GOVERNANCE CORPORATE MANAGEMENT

External Focus Internal Focus

Governance assumes an open system Management assumes a closed


system

Strategy-orientated Task-orientated

Concerned with where the company is Concerned with getting the company
going there
“Corporate governance is… holding the balance
between economic and social goals and between individual
and communal goals. The governance framework is there to
encourage the efficient use of resources and equally to require
accountability for the stewardship of those resources. The aim
is to align as nearly as possible the interests of individuals,
corporations and society. The incentive to corporations is to
achieve their corporate aims and to attract investment. The
incentive for states is to strengthen their economics and
discourage fraud and mismanagement.”
83 81 89

Companies are willing to pay 18 % to 28% more for better


governance.
k You
h
Tan

You might also like