Corporate governance ppt mba

CORPORATE GOVERNANCE

Corporate Governance

What is Corporate Governance ?

Corporate Governance refers to the structures & Corporate Governance refers to the structures &

processes for the efficient & proper direction & control processes for the efficient & proper direction & control

of companies (both private and public) in the interest of of companies (both private and public) in the interest of

all stakeholdersall stakeholders.


What is Corporate Governance ?

- Is a concept; one size does not fit all, HOWEVER:

- Basic Principles of Corporate Governance:

AccountabilityAccountability Rights of ShareholdersRights of Shareholders

TransparencyTransparency Interests of StakeholdersInterests of Stakeholders

FairnessFairness Good FaithGood Faith DiligenceDiligence

IntegrityIntegrity TrustTrust DisclosureDisclosure

ResponsibilityResponsibility ControlsControls CommitmentCommitment


Corporate Governance Framework

Governance Principles

Legal / RegulatoryLegal / Regulatory

Codes of Best PracticeCodes of Best Practice

Stakeholder RelationsStakeholder Relations

Self RegulationSelf Regulation

Ethical StandardsEthical Standards

Risk ManagementRisk Management


Why Corporate Governance Matters• Enhances performance of companies

• Enhances access to capital

• Enhances long term prosperity.

• Provides a barrier to corrupt dealings- limiting discretionary decision

making, increasing oversight, introducing Codes of Ethics etc

• Impacts on the society as a whole:

Better companies, Better societiesBetter companies, Better societies..


“ “ The proper governance of companies will become as crucial The proper governance of companies will become as crucial

to the world economy as the proper governing of countries”.to the world economy as the proper governing of countries”.

Good Corporate Governance and GoodPublic Governance are complementary

James WolfensohnPresident of WB, 1999


Corporate Governance-Channel of Growth & Development

Country level

Sector level

Individual firms


• Increases access to external financing leading to larger

investment, high growth & creation of more jobs

• Better allocation of resources

• Better management creating wealth

• Reduces the risk of financial crisis

• Better relationship with all stakeholders

Corporate Governance-Channel of Growth & Development


• Generally derived from the private sector

• Ensures public accountability

• Promotes responsive and accountable institutions

• Good financial management of resources

• Good stewardship –

– Responsibility to protect the wealth of the state and its citizens

– Maintain and safeguard it in the interest of the citizens

Corporate Governance-Principles for the Public Sector


• Good Governance by Host Country

• Good Governance by Private Sector

• Good Governance by Investment Promotion Agencies

• Good Governance by Investors

Good Corporate Governance, Good Government & Good Business go hand in hand


Transparent, stable and predictable investment climate:

• Appropriate legislation to support investment

• Anti corruption measures

• Effective , speedy and transparent resolution of disputes

• Forum for Investors

• Capacity Building

Good Governance by Host Country


• Institutional Framework

• Role of Board of Directors

• Management

• Risk factors

• Transparency & Disclosure

• Reputation

Good Governance by Private Sector


• Self Regulation

• Transparency & Disclosure

• Accountability

• Commitment

• Sound and Clear Administrative Policies

• Stakeholder engagement

Good Governance by Investment Promotion Agencies


• Good faith

• Business Integrity

• Governance Policies

• Human Capital

• Corruption Practices

Good Governance by Foreign Investor


• Continued advocacy on the benefits of Corporate Governance

• Codes of Corporate Governance for countries

• Capacity building

• Sourcing of funds to support Corporate Governance

development.

• Every institution , every stakeholder should provide input into

the corporate governance agenda

Recommendations


“ “ If a country does not have a reputation for strong corporate governance If a country does not have a reputation for strong corporate governance

practice, capital will flow elsewhere. If investors are not confident with the level practice, capital will flow elsewhere. If investors are not confident with the level

of disclosure, capital will flow elsewhere. If a country opts for lax accounting and of disclosure, capital will flow elsewhere. If a country opts for lax accounting and

reporting standards, capital will flow elsewhere. All enterprises in that country- reporting standards, capital will flow elsewhere. All enterprises in that country-

regardless of how steadfast a particular company’s practices may be- suffer the regardless of how steadfast a particular company’s practices may be- suffer the

consequences. Markets exist by the grace of investors. And it is today’s more consequences. Markets exist by the grace of investors. And it is today’s more

empowered investors that will determine which companies and markets will empowered investors that will determine which companies and markets will

stand the test of time and endure the weight of greater competition. It serves us stand the test of time and endure the weight of greater competition. It serves us

well to remember that no market has a divine right to investors’ capitalwell to remember that no market has a divine right to investors’ capital

Conclusion