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 h l i ll i d h ff d 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 dealswithdailyoperations,while deals with daily operations, while Governance isabouttheunderlyingethicsofacorporation. Poormanagementcanaffectgovernance Weakgovernanceunderminesthefinancialand W k d i th fi i l d operationalperformanceofacorporation Weak governance affects investorsfaithinthe Weakgovernanceaffectsinvestors faith in the company.

Corporate Governance

Business Ethics

Structure of decision-making decision-

Guide for behavior

CORE VALUES Transparency F i Fairness Accountability Responsibility Responsibilit

CIPE 2008

 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

Effective corporate governance means that:

Transparency values are present Investors receive timely and relevant information Decision-making is not done behind closed Decision making doors Decision-makers are held accountable for h their actions Managers act in the interest of a company

CIPE 2008

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

CIPE 2008

Functioning Markets Better Environment for Doing Business

Good Property p y Market Governanc G Entry Rights e

CIPE 2008

Rule of Access to Informatio I f ti Law n

Owners and managers in family firms are the same so is corporate governance still go ernance 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

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 well-understood policies for the company C f Create a strategy to handle growth of company

CIPE 2008

Findoutwhatinformationthecompanyhasactuallysubmittedandask thefollowingquestions: the following questions: Arethereportsaccurate? Arethereportsadequate? Howeasyisitforshareholderstoaccessinformation? Whatisthecompanysattitudetowardshareholdersandother stakeholders?

Itisessentialthateverycorporategovernancestoryincludesthebasic elementsofgoodjournalism: l f dj li
Factualandaccurateinformation Crediblesources C dibl Jargonfreelanguage Balanceandfairness Timeframe Context&background Implications & relevance Implications&relevance Thesowhatangle

Serveourreaders/listeners/viewers; Representthemwhentheycannotbepresent; Payattentionforwarningsigns; Pay attention for warning signs; Findandtellthetruthasfarasyoucan; Exposeproblems/fraud/corruption/negligence/incompetence/ E bl / f d/ ti / li /i t / abuseofpower; d d hd ( ll h l Actasanindependentwatchdog(especiallywhereregulationsor thelegalsystemisimperfectorinsufficient);

Challengebusinesspeople,politicians,regulators,andabsolutely anyoneinvolved Checkinconsistenciesincommentsandclaims Reportviewsfromallsides Compareandcontrastdifferentviews Compare and contrast different views Explainandgivebackground Anal e the sit ation ( ith the help of reso rces) Analyzethesituation(withthehelpofresources)

g p g , p y p Forgoodcorporategovernance,acompanysleadership shouldbeclearandtransparentabouthowacompanyisrun andhowitisdoing and how it is doing Ifthemediadoesitsjobwell,itwillhelpmakethesituation moretransparent; Themediasjobistoaskquestionsandfollowuptheanswers; Journalistsmustunderstandcorporategovernanceissuesto beeffective be effective

Forbalanceaskavarietyofdifferentstakeholderstheirviewson corporategovernancequestions; StakeholdersrepresentawiderangeofsourcesforstoryideasonCG; p g y Buildyourknowledge.Thinkmoreabouttheissuesaroundcorporate g governanceandyoumaygetmoreideasforstories y yg Corporategovernanceisawaytolookfortherootofacompanys problems

Companynewsisnotjustaboutreportingresultsandperformancebut alsowhathappenswithinacompanytoachievethat; Itsnotjustaboutstrategybuthowacompanydecidedonthat j gy p y strategy; Highlightwheretransparencyislackingandprivilegeexists.Otherwise g g p y g p g someonegetsanunfairadvantage,whichislikelytobeinefficient;

Highlightwhatdiffersinyourcountryfrominternationallyaccepted goodorbestpractice(andaskwhy); Seewhatlaws/regulations/codesyoudonthaveinyourcountrythat g y y y othersdoandaskwhynot?; Discusstherelationshipbetweenthefinancialcrisisandcorporate p p governanceissues audienceinteresttendstoincreasewhen marketsfallandcompaniescrash p

Highlight issuesratherthanthetermcorporategovernancebut begintousetheterminarticlesandexplainwhatitmeans. Poorcorporategovernancecanleadto:

CorruptionandFraud Conflictsofinterest I t f Interferencebetweenfamilyproblemsandthecompany b t f il bl d th Taxevasionormoneylaundering Poortreatmentofemployees Disregardfortheenvironment

Theseare issuesthataffectall Yemenis

Examplesandcasestudiesaregoodwaystoexplain Examples and case studies are good ways to explain toyouraudience; Peoplelikereadingaboutpeople.Humanizethe corporategovernancestories howdoesthiseffect corporate governance stories how does this effect ordinarypeople?

Askcompanieswhytheydontfollowacceptedcorporate governanceprincipleswhereothersdo; Ifacompanyisnotsubmittinginformationtothepublic,askthem p y g p whynot? Checkthebylawsofacompany whatdotheyrequirethe y p y y q companytodo?Aretheycomplyingwiththeirownrules?

Seewhatschangedfromcompanyspreviousannualreportetc.what donttheyreportorhighlightanymore?Havetheychangedfocusand, ifso,why?; Trytofindpeopleontheinsidethatwillgiveyouinformation but bewarelegalproblems; Raisingquestionsatanearlystagecanwarnpeopleofpotential problemsbeforetheauthoritiestakeaction; p ;

Trytoinfluencegovernmentsandregulatorstotakenecessaryaction; Probetoseeifcompaniesputactiontotheirwordsaboutcommitting togoodcorporategovernance g p g Followup/monitoranypromisesofaction; Makeforeigninvestors,analysts,portfoliomanagersandactivemarket Make foreign investors analysts portfolio managers and active market playerspartnersandcontributors; Check relevant forums and blogs for clues Checkrelevantforumsandblogsforclues SubscribetospecialistpublicationslikeGlobalProxyWatch.

Corporategovernanceaffectsshareholders,workers,customers, suppliers,financiersconcernedaboutinvestments,peoplewith pensionfunds youhavetoillustratetheimpact.

Executiveexcess.Greed.Powerstruggles gg

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

CompanyEmployees; CompanyAnalysts; FormerEmployees; CompanyAdvisors; Company Advisors; PRRepresentatives; IndustryAssociations; y ; Competitors;and FrontlinePersonnel.

Goodreportingonbusinessandeconomictrendscanbefoundon: BBCatwww.bbc.co.uk BusinessWeekathttp://www.businessweek.com: Business Week at http://www.businessweek.com: TheEconomistatwww.economist.com:Thisofferssomearticles withoutasubscription. TheFinancialTimesatwww.ft.com(partialsubscription) Reutersatwww.reuters.com The Wall Street Journal at http://www wsj com (subscription only) TheWallStreetJournalathttp://www.wsj.com(subscriptiononly)

THANKYOU THANK YOU