CG World Wide

8/7/2019 CG World Wide

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MBA-II, CG prepared by NeeruRaghav, Asst Prof, SDCMT1

CG World Wide( Unit ± I )




CG- Company & Country

CG differs from organization to Organization & from Country to

country

Governance differs in each Org. & shaped as per company¶s

Objectives ( its Mission & Vision), & political , economic, legal &

social history of the country.

Practices adopted Mind set & value system of Org.




Need arises for Universally accepted code due to globalization

CG plays role in Accounting Practices in any economy

If greed & mal practices prevailed then country's reputation is

on risk

E.g Enron & Satyam Computers,

Corporate scandals, like the alleged executive greed and accounting

improprieties at energy giant Enron, have thrust corporate governance

practices into the spotlight, illustrating the fundamental role they play in

any economy.




CG Models

Does CG operate same way in all

economies? They differ as per capitalism & 2 models

are:

1. Anglo American Model

2. Non Anglo American Model




Anglo American Model

Globalization argues that C G. practices

across nations follow 2 models of A.A M1. Anglo American Share Holder centered

Model ( Common in Anglo-American

countries, UK & US)

2. Anglo American Share holder & stake holder

Model. ( Found in East Asian Countries-

Japan, Germany)



MBA-II, CG prepared by Neeru

Raghav, Asst Prof, SDCMT6

Anglo American Share Holder centeredModel

Focus on Share holder¶s interest

Strongly encourage Innovation & costcompetition

Share holders elect BOD

Org. runs by BOD

BOD elects CEO CEO manages day today tasks & also seeks

approval from BOD for certain decisions.





Management professor Guillen¶s CG

Under globalization, expansion across

nations require more coordination by govt. &different system of CG exist.

Globalization encourages:

Be different firm

Enter in international Market in distinctway rather then to follow on a best model.





Korean C G

Korean company tried to be big Co. by

selling low cost cars & they were in standardquality cars.

Later Bank has influence over Co. (what is

happening in Co.)

This relationship influences korean corporate

governance.





French CG

French CG also exemplifies the effectiveness

of different strategies French design high speed trains & Nuclear

Reactors best in the world.

They involve public agencies, banks, govt to

produce specific product & that is why they

are producing best product.





CG Affected

Imp. Connection between CG & Strategies of

Firms CG is affected by many things in an economy

, such as Labour Laws, Tax Laws &

Bankruptcy legislation.

Globalization is not changing CG system so

that all economies have same rule.





CG world Wide by Guillen

Six indicators which explain CG in individual country.

Stock of foreign investment in their home country

Presence of institutional investor in each country

Adoption of long term incentive in CEO¶s package

Balance of dept & equity financing structure by non fin Co¶s

Promotion of listed corporate equity held by diff shareholders

Hostile take over ±( Market control by corporate)





Anglo American Model Follows

Focus on short term goal

CEO is main authority Profitability is considered into account

Capital market are quite active to take overs

& control

There is poor management in company so

threats is also in air





Non-Anglo American Model

A system of family cross holdings.

A study by Claessens, in 2000 investigationto top 15 families dominate listed corporate

asset.

Japanese¶s style of CG is efficient in west.

They believe in Monitoring by shareholder &

Banks.





Japanese Style of CG

Long term goal

Initiate capital market Less mergers& Acquit ion

Monitoring system





Codes & Guidelines

C G principal & codes have been developed

by Stock Exchange. If countries deviate they need to explain the

concern of divergent practices





OECD Principles

OECD principles have become influential in

1999. 30 countries' govt. have approved revised

version of principles whererecommendations are:

1. Corporate Good Behavior to rebuild &maintain trust in companies & stock Market

2. Strengthen transparency & disclosures tocounter conflicts of interest.





CG in India

With a view to provide good governance to corporatesector, some of the laws under legal regulatory

framework are: Company act 1965 deals with issues like,

Composition, appointment, removal of directors fromBoard, Corporate Mergers, Acquisitions, etc.

Securities Contract Act 1956 deals with issues

related to listing agreement of Stack exchange Companies Act deals with issues related to

promoting competition and controlling monopolistictrade activities.





CG in India

Foreign Exchange Mgmt act controls

activities related to foreign flow of funds. Board of Industrial & Financial reconstruction

that looks into revival of industries that have

falled sick

SEBI deals with issues related to unfair trade

practices, insider trading, regulation of Stock

Market, etc.





CG in India

Initiatives take by Ministry of Corporate Affairs are:

Setting up of investor Education & protection Fund; Empowering investors by education & information

with help of investors associations, webcites are:

www.investorhelpline.in, www.watchoutinvestor.com

All listed companies has to follow SEBI rules & needto produce reports time to time as required by SEBI.





WORLD COUNCILFOR CORPORATE

GOVERNANCE

TheWorld Council for Corporate Governance was establishedas an independent, not for profit international network aimed togalvanize good governance practices worldwide.

It was established at the first International Conference onCorporate Governance held in January 200 1in New Delhi.

World Council for Corporate Governance was registered with

Companies House on 23 October 2002 as a company limitedby guarantee under registration no. 4570299





Mission:

Making a difference to national economies by improving qualityof their corporate governance

"The foundation of any structure of corporate governance isdisclosure.Openness is the basis of public confidence inthe corporate system and funds will flow to the centers of economic activity that inspire trust.

The mission of the World Council is to establish that trust andwith it the widest possible encouragement of enterprise."

Sir Adrian Cadbury





Vision

Vision of WCFCG is become a leading provider of knowledge

about best practices in corporate governance to companyboards, policy makers, investors, fund managers, financialadvisors, researchers, academics and other interested partiesby creating active partnerships and foster cooperativerelationships between organizations committed to improvingquality of corporate governance worldwide.





WORLD COUNCIL

Objectives

The Council has been established to help improvethe quality of corporate governance practicesworldwide by promoting greater transparency,integrity, probity, accountability and responsibility. Itaims to achieve its vision through a four-prongedaction plan called IDEA

InteractionBroaden the interaction among all stakeholdersinvolved in corporate governance process;





WORLD COUNCIL

DialogueIdentify specific needs of developing and transition economies and usethe power of dialogue to build a consensus and create partnerships

among all stakeholders especially public and private sectors andcapital providers with a view to adopting best corporate governancepractices;

ExchangeExchange information, experience and knowledge about best practicesin corporate governance worldwide through conferences, seminars,workshops and roundtables;

ActionProvide hands-on technical support to help developing and transitioneconomies to bridge the gap between them and developed countries





Index of codes, India

-Corporate Governance Voluntary Guidelines

2009 24 December 2009-

Report of the Kumar Mangalam Birla Committee on

Corporate Governance February 2000-

Draft Report of the Kumar Mangalam Committee on

Corporate Governance September 1999-

Desirable Corporate Governance in India - A

Code April 1998





Mexico

Código de Mejores Prácticas Corporativas2010 2010-Código de Mejores Prácticas

Corporativas July 1999





Ghana

Corporate Governance Guideleines on BestPractices 2010

Documents

CG World Wide