How to Write about Corporate Governance

Prepared and Presented by

Yasser Akkawi

An active and informed media is essential in helping small investors and other affected stakeholders make informed decisions about corporations.

Good governance is a fundamental

element of a democratic society.

The media sector provides oversight and strengthens a democratic system.

Management deals with daily operations, while

Governance is about the underlying ethics of a corporation.

Poor management can affect governance Weak governance undermines the financial and

operational performance of a corporation Weak governance affects investors’ faith in the

company.

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Corporate Corporate GovernanceGovernance

Business EthicsBusiness Ethics

CORE VALUESCORE VALUESTransparencyTransparency

FairnessFairnessAccountabilityAccountabilityResponsibilityResponsibility

Guide for behaviorGuide for behaviorStructure of decision-makingStructure of decision-making

◦ Ethical business practices increase the ability to keep existing customers and gain new ones

◦ Positive impact on employees

◦ Attracts foreign and domestic investment

◦ Improves the image of the company to the public

◦ Shows a commitment to playing a positive role in society and being a good corporate citizen

CIPE © 2008 5

Effective corporate governance means that:◦ Transparency values are present◦ Investors receive timely and relevant

information◦ Decision-making is not done behind closed

doors◦ Decision-makers are held accountable for

their actions◦ Managers act in the interest of a company

CIPE © 2008 6

Effective corporate governance makes it hard for companies to provide bribes or other company resources to government officials in exchange for services.

CIPE © 2008 7

Functioning MarketsBetter Environment for Doing Business

CIPE © 2008 8

Rule of Rule of

LawLaw

Good Good GovernancGovernanc

ee

PropertyProperty

RightsRights

Access to Access to InformatioInformatio

nn

MarketMarket

EntryEntry

Owners and managers in family firms are the same – so is corporate governance still relevant?

Need access to new capital Prepare for succession planning Transparency in decision-making Improve company image in the community Ensure legal compliance with the laws Confront corruption

CIPE © 2008 9

Separate family and company relationships

Address differing interests of among family members (some want dividends, others want to reinvest profit)

Create well-understood and concrete governance policies for the company

Create a strategy to handle growth of company

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Find out what information the company has actually submitted and ask the following questions:

Are the reports accurate?

Are the reports adequate?

How easy is it for shareholders to access information?

What is the company’s attitude toward shareholders and other

stakeholders?

It is essential that every corporate governance story includes the basic elements of good journalism:

Factual and accurate information Credible sources Jargon-free language Balance and fairness Time frame Context & background Implications & relevance The ‘so what’ angle

Serve our readers/listeners/viewers;

Represent them when they cannot be present;

Pay attention for warning signs;

Find and tell the truth as far as you can;

Expose problems/ fraud/ corruption/ negligence/ incompetence/

abuse of power;

Act as an independent watchdog (especially where regulations or

the legal system is imperfect or insufficient);

Challenge business people, politicians, regulators, and absolutely

anyone involved

Check inconsistencies in comments and claims

Report views from all sides

Compare and contrast different views

Explain and give background

Analyze the situation (with the help of resources)

For good corporate governance, a company’s leadership should

be clear and transparent about how a company is run and how

it is doing

If the media does its job well, it will help make the situation

more transparent;

The media’s job is to ask questions and follow up the answers;

Journalists must understand corporate governance issues to be

effective

For balance ask a variety of different stakeholders their views on

corporate governance questions;

Stakeholders represent a wide range of sources for story ideas on CG;

Build your knowledge. Think more about the issues around corporate

governance and you may get more ideas for stories

Corporate governance is a way to look for the root of a company’s

problems

Company news is not just about reporting results and performance

but also what happens within a company to achieve that;

Its not just about strategy but how a company decided on that

strategy;

Highlight where transparency is lacking and privilege exists. Otherwise

someone gets an unfair advantage, which is likely to be inefficient;

Highlight what differs in your country from internationally accepted

good or best practice ( and ask why);

See what laws/regulations/codes you don’t have in your country that

others do and ask why not?;

Discuss the relationship between the financial crisis and corporate

governance issues - audience interest tends to increase when

markets fall and companies crash

Highlight issues rather than the term “corporate governance” but

begin to use the term in articles and explain what it means.

Poor corporate governance can lead to:◦ Corruption and Fraud

◦ Conflicts of interest

◦ Interference between family problems and the company

◦ Tax evasion or money-laundering

◦ Poor treatment of employees

◦ Disregard for the environment

These are issues that affect all Yemenis

Examples and case studies are good ways to explain

to your audience;

People like reading about people. Humanize the

corporate governance stories – how does this effect

ordinary people?

Ask companies why they don’t follow accepted corporate

governance ‘principles’ where others do;

If a company is not submitting information to the public, ask them

why not?

Check the by-laws of a company – what do they require the

company to do? Are they complying with their own rules?

See what’s changed from company’s previous annual report etc. what

don’t they report or highlight any more? Have they changed focus

and, if so, why?;

Try to find people on the inside that will give you information – but

beware legal problems;

Raising questions at an early stage can warn people of potential

problems before the authorities take action;

Try to influence governments and regulators to take necessary action;

Probe to see if companies put action to their words about committing

to good corporate governance

Follow up/ monitor any promises of action;

Make foreign investors, analysts, portfolio managers and active

market players partners and contributors;

Check relevant forums and blogs for clues

Subscribe to specialist publications like Global Proxy Watch.

Corporate governance affects shareholders, workers, customers,

suppliers, financiers concerned about investments, people with

pension funds – you have to illustrate the impact.

Executive excess. Greed. Power struggles

Conflict between managers and owners (as well as other stakeholders)

Company Employees; Company Analysts; Former Employees; Company Advisors; PR Representatives; Industry Associations; Competitors; and Front-line Personnel.

Good reporting on business and economic trends can be found on:

BBC at www.bbc.co.uk Business Week at http://www.businessweek.com: The Economist at www.economist.com: This offers some articles

without a subscription. The Financial Times at www.ft.com (partial subscription) Reuters at www.reuters.com The Wall Street Journal at http://www.wsj.com (subscription only)

THANK YOU